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I Was Afraid of Investing in Crypto – Here’s What Changed My Mind
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Unless you have ignored financial news for the past few years, you are well aware of the cryptocurrencies have reached popularity. They have helped many people become “crypto millionaires” almost overnight. But for some people, has become an addiction.
Most crypto coins feature extreme volatility swings, complex techniques, and very little regulation. So, even though there is an opportunity and people have become rich, many are still hesitant to invest in the crypto market.
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“When I first discovered Bitcoin in 2014 during my MBA studies, I was quite skeptical about its viability and very cautious about its legal status, as there was no regulatory framework for it. era,” said Ron Stefanski, business thought leader and founder of BusinessGuru.co.
“I remember discussing Bitcoin with my entrepreneurial finance professor and he shared an anecdote about his niece who invested $1,000 in Bitcoin in 2012 and saw her investment grow to over $50,000 in 2014. Although This is an intriguing story of high returns, it also gave me pause, as the dramatic volatility seems extremely risky. I decided not to invest at this stage due to the unfamiliarity and uncertainty of the early crypto markets.
Most people invest their money based on research and understanding of an asset. For example, someone invests in Apple because they believe the company will continue to develop new products that will maintain a moderate to high growth trajectory. This research and knowledge gives them confidence that their investment will grow.
Crypto has always been a totally different ball game. While you can predict price movements based on technical analysis, understanding where a coin is going due to fundamentals is mostly unknown. This is why many small investors and large institutions have hesitated.
“Beyond the typical concerns of volatility and regulatory uncertainty, my reservations about crypto related to a lesser-known fear: fear of the unknown,” says Artem Minaev, principal investment advisor and co-founder of CryptoDose. “The vastness and complexity of the crypto landscape seemed overwhelming to me, especially since I lacked a deep technical understanding. The fear of making uninformed decisions and the anxiety of missing out on opportunities due to my limited knowledge kept me away.
Let’s take an in-depth look at the present and future of crypto investments.
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Changing People’s Minds About Crypto
Over the past few years, more and more businesses have started accepting digital currencies. For example, you can buy movie tickets at AMC theaters with Bitcoin. Or you can buy your Starbucks coffee with Bitcoin or Ethereum. With greater adoption by major retailers, more people will likely accept crypto as valid currency.
But for some, it will take more than that. They want tangible proof that crypto is a safe and reliable currency.
“Rather than succumbing to the fear of financial loss, I started exploring unconventional investment prospects in crypto,” says Minaev. “Investment strategies, such as cost averaging and focusing on long-term fundamentals, have provided a refreshing alternative to the speculative mindset often associated with cryptocurrencies. Understanding these approaches eased my fear of market volatility and created a more sustainable investing mindset.
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Major financial institutions have long been critical of crypto. JP Morgan CEO Jamie Dimon has been a critic for years. He even recently called Bitcoin a “pet stone”. However, JP Morgan has tripled the number of people working in the blockchain unit and manages $1 billion in blockchain transactions daily.
“My perspective really started to change when major institutional players like Fidelity, NYSE and JPMorgan started moving into this sector,” Stefanski said. “The regulatory environment has also matured significantly. This growing legitimacy meant that blockchain technology was likely to transform finance in profound ways and could no longer be considered a passing fad.
How to invest in crypto safely
If you have the risk tolerance to handle crypto, this is a great way to add additional diversification to your portfolio when done safely.
Never invest more than you can afford
When the crypto craze started to take off, people wanted to jump on the bandwagon. They were very afraid of missing something. With such high volatility, people have lost a lot of money during downturns. One of the most important rules when investing, especially in cryptocurrencies, is to not invest more than you can afford to lose.
Average dollar cost in a position
Cryptocurrency prices can fluctuate significantly over a very short period of time. If you want to invest in a particular coin, it is best to dollar cost average to enter the position. Instead of making one large purchase, make several smaller purchases over a longer period of time. This will allow you to participate in price drops while still making money.
Stick to major currencies
While smaller currencies are more likely to experience considerable price appreciation, they can also suffer the greatest losses. If you’re just starting to get into crypto investing, stick with the bigger coins, such as Bitcoin and Ethereum. These coins have larger market capitalizations and products such as ETFs are built with them.
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This article was originally published on GOBankingRates.com: I Was Afraid of Investing in Crypto – Here’s What Changed My Mind