There was a time when cryptocurrencies were on everyone’s lips. Bitcoin & co. went from a niche product known only by a select number of people to being one of the hottest assets on the market in what seems like fractions of a second, revolutionizing the world of finance as they rose to prominence. The reasons for the rising popularity of this emergent asset class are numerous and complex – accessibility, decentralization, security, inflation protection, investment opportunities and intense media coverage were all contributing factors in creating the crypto hype.
People began investing in cryptocurrency like there was no tomorrow, some going as far as putting all their life savings into crypto. The high volatility and recurrent ups and downs as the market went through the expected growing pains didn’t diminish users’ enthusiasm, nor did it discourage them from continuing their trading journey. With increased usage came increased knowledge and credibility, and so the number of crypto followers grew steadily year after year.
Now, a little over a decade letter since the birth of the crypto phenomenon, it appears that the hysteria has finally cooled down. There’s certainly more awareness of crypto than ever before, but people are not diving headfirst into cryptocurrency like they used to. Some are saying that cryptos have lost their shine, and that has caused many investors to back down. But how true is this statement? Are cryptos’ glory days truly over, or is it just a normal phase the market is going through currently? And the big question on everyone’s minds: is investing in crypto still a lucrative endeavor?
Risks and hazards to be aware of
The cryptocurrency market has just had one of its toughest years, with many leading coins suffering a massive decline. However, it doesn’t really come as a surprise that crypto values are falling. This has happened numerous times before, given that volatility is one of the main features of the crypto environment.
If you’re a newbie, the first thing you have to know about investing in crypto is that it’s a double-edged sword. Extreme volatility can lead to sudden price swings, which can either translate into high earnings or equally massive losses, depending on your investment skills and strategy.
It’s true that other types of assets like stocks, real estate or commodities also come with their fair share of unpredictability, but crypto price swings tend to be more sudden and a lot sharper, owing to the newness of the market. So, crypto is still a highly speculative investment for the time being, and it will probably remain so until the market matures.
Another aspect to take into account is the probability of falling victim to thefts or scams. Decentralization, one of crypto’s strongest suits, can also turn into a major weakness, as it places the entire responsibility for keeping crypto assets safe on the user. Unaware of the risks they expose themselves to and the security measures they should take, users can lose their keys and leave their accounts vulnerable to hackers. Apart from that, with crypto’s growing popularity, the number of scams has also increased, giving users an additional reason for concern.
The case for investing in crypto
As you can see, investing in crypto is not always rainbows and butterflies. It’s easy to learn how to buy cryptocurrency, but it’s not as simple to figure out how to manage your assets properly. The cryptoverse is an extremely complex field, filled with risks and uncertainties, and it can take a lot of effort and time to get a good grasp of it. And even when you feel you’ve gained enough experience and confidence as a crypto investor, there’s still no guarantee things will go the way you expect.
However, the risks and hazards associated with trading digital currencies don’t take away from cryptos’ potential as an investment option. If you’re having doubts about it, here are a few aspects that reinforce the idea that crypto is a good investment, now and in the future.
To begin with, investing in crypto is not as complicated or difficult as it may seem. People fear the complexities of the technology that underpins crypto projects and worry they may not be able to navigate this intricate universe. This may have been the case in the early days of trading cryptocurrency when information on the topic was scarce. But now, there are tons of easily accessible resources that can teach you everything you need to know about investing in crypto and help you check the legitimacy of the projects you’re interested in, so you can start your crypto journey on the right foot and make sound investment decisions.
Education aside, the possibility of generating massive returns by investing in crypto is still as tempting as ever. Those who worry about the recent crypto drop should recall that the market has gone through numerous downturns in its short history but always recovered, proving its strength and resilience time and time again. After each period of decline, the crypto market is bound to bounce back, and you’ll want to be there when that happens. Besides, you can make money regardless of the phase in the crypto market cycle. But for that, you need to learn how to weather the storms and be in for the long run.
Finally, looking at the current state of the crypto environment, you can easily see there’s a clear trend toward gradual adoption. As more businesses, organizations and governments are embracing crypto as an integral part of the financial system, digital assets are inching closer to mainstream adoption. By all accounts, crypto will one day be on par with fiat currencies and become a pillar of the economy, so it makes financial sense to include it in your portfolio early on and be prepared for what’s to come.
Crypto investing is definitely not everybody’s cup of tea, but there’s no denying it can be a very lucrative activity. We’re looking at a very young asset class, still very far from reaching its full potential, so we’ve only just begun to scratch the surface with respect to it. This means there are plenty of exciting developments lying ahead, and we can’t wait to see how things will unfold.
