Cryptocurrencies and digital assets have become increasingly popular since the debut of Bitcoin in 2009. In reality, a recent poll revealed that 21% of American adults own cryptocurrency, which is expected to rise in the next year.
Created by the pseudonymous developer Satoshi Nakamoto, Bitcoin (BTC) is one of the most popular cryptocurrencies. Its total value has at times exceeded $1 trillion, making it a unique asset class with significant potential for diversification.
If you want to invest in cryptocurrency, learning about the different types of coins and their past performance can help you feel more confident with your investment choices. Below, we explain some crucial things to know before investing—and how make cryptocurrency investments work for you.
The ease with which cryptocurrencies may be exchanged is one of the reasons why they are becoming increasingly popular. Unlike the stock market, which is only open at set intervals, crypto can be traded 24 hours a day, seven days a week, 365 days a year. As a result, they have become more appealing and accessible to all types of investors.
Cryptocurrencies, like other types of assets, have both positive and negative aspects. One of the downsides is that they are volatile. Because cryptocurrencies aren’t regulated by any one entity, their prices can change rapidly. For example, Bitcoin was worth around $10,000 in May 2020 but by October 2021 its value had risen to over $68,000 before dipping back down to $38,000 in May 2022.
Although Bitcoin prices have increased and fallen over time, it has still shown an overall positive performance, leading to high returns for some investors.
While crypto investing does involve some risks, it can also come with significant benefits. These include increased diversification which can increase portfolio performance in the long term and even the possibility of offsetting some of the negative effects of inflation. Understanding these risks and benefits can help you determine which crypto investments may be best for you.
Some investors may shy away from cryptocurrency because it is new and uncharted territory. However, what many don’t realize is that crypto can be useful for both long-term and short-term investment goals. For those looking to invest in the short term, strategy becomes more involved and hands-on. One popular method is using perpetual futures to gamble on which direction the price of cryptocurrency will move next. These strategies have potential to bring high rewards but also come with greater risk; therefore, they should only be pursued by experienced investors.
If you want to achieve long-term objectives, it’s essential to diversify your portfolio and minimize risk wherever feasible. Long-term owners of a commodity, such as Bitcoin, are free from worry about short-term volatility. Dollar-cost averaging is a popular approach for investors who like this method: purchasing a constant quantity of an asset like Bitcoin or Ethereum at a set time period, such as daily or weekly.
Experts have suggested various alternative asset allocation percentages ranging from 1% to 5% of your portfolio, depending on your risk tolerance.
Though crypto investing used to be thought of as a high-stakes activity, that’s rapidly changing as more people learn about the market. If you’re looking to invest in digital assets, there are now many platforms that enable you to do so according to your financial goals and risk tolerance. That said, not every platform provides access to a broad range of currencies.
If you’re looking for a trusted, easy-to-use platform to trade cryptocurrencies, look no further than FTX. With competitive fees and a free coin with every trade over $10, you can’t go wrong. Plus, with FTX’s cutting-edge platform, you can buy, sell, or even create NFTs in just a few clicks!
Although the cryptocurrency market may seem complex, knowing the basics can equip you to align your investment goals with your trading strategy. With the right platform, you can grow more confident in your decisions and trade like a pro.