After its inception in 2010, Bitcoin was the first digital asset to spawn an entire market of currencies. Throughout its course, It had attracted a large following of investors who seemed to be very interested in its potential to become a substitute to our current physical monetary system throughout its course.
It’s highly likely that it will still take a few years for a full transition. The cryptocurrency market has been known for being a volatile playground. During the rise in popularity and adoption of crypto, many people released ICOs (these stand for Individual Coin Offerings, similar to offering new stock) unregulated and unsupervised. At the time, Bitcoin skyrocketed in value to nearly $20,000 per coin in 2017, but then its value consistently declined over the course of 2018 and nestled in the $3,500 to $4,000 range for quite some time.
This rapid rise and fall of Bitcoin’s value have made folks hesitant to invest in cryptocurrencies. However, recent activity has caused a significant surge in Bitcoin’s value in the past few years and has caught the attention of both existing and would-be investors alike.
The crypto market has matured, with more oversight and regulatory controls being put in place by both institutions and government agencies throughout the past few years. Because of this, more people are now seeking ways to reduce their risk while still seizing a profitable return of investment.
Here are some tips that can help you successfully invest in cryptocurrencies, taken from industry experts:
Diversifying your risks is necessary
With loads of cryptocurrency success stories out there, many people are looking to take their chances in the crypto market and win big, treating it as if it were the lottery.
And while experts will agree that you can still win big by taking your chances and timing the market just right, you have just an equal chance to lose big time.
Experts believe that the key to success when investing in cryptocurrency is to diversify your risk. You can do this by investing in a pool of cryptocurrencies that are reviewed by financial professionals, similar to your 401k accounts or index funds.
The recommendation of investing into index funds can be likened to the saying “do not put all your eggs in one basket”, something that many people did when they invested in a single coin or ICO and subsequently lost big when the cryptocurrency market deflated back in 2018. It makes quite a lot of sense to try to diversify as much as possible because, as previously mentioned, there is a lot of volatility in cryptocurrency, and it is subject to a lot of risks. You would want to make sure that you have a well-varied basket of them and hopefully land on one of the investments that will do very well in the future.
Find regulated professionals to invest through
Probably one of the trickier parts of starting your investment in cryptocurrencies is finding a financial professional who can effectively research and recommend a portfolio of cryptos. These people make it their job to give you carefully selected options of crypto investments that provide a steady return-on-investment while minimizing your exposure to a dip in the market.
There are many different options when it comes to cryptocurrency apps and investment platforms, but one of the factors that investors should seek out when working with financial professionals are those who have earned Registered Investment Advisor (RIA) status. This title is awarded by the Securities Exchange Commission.
RIAs have a fundamental obligation to provide advice that always acts in their clients’ best financial interests. They are required to register either with the Securities and Exchange Commission (SEC) or their state’s securities administrators. RIAs are regulated, and they are also made fiscally responsible for whatever investment advice and recommendations they give.
As crypto continues to develop and become more complex, it is only going to be more time-consuming and challenging to read up on which coins and tokens are worth investing in and which ones to avoid like the plague. Working with people who have done the work to become registered professionals may help you save time and hopefully increase your chance of making a profitable investment.