Cryptocurrency has had a wild ride this year. From expanding institutional and retail usage to China tightening its regulations on crypto transactions, no other investment asset class has sparked as much attention. Bitcoin has remained at all-time highs throughout it all and is the most widely used and talked cryptocurrency. However, on a year-to-date (YTD) basis, altcoins like Ethereum, which has climbed by 500 per cent, and Cardano, which has increased by 1,000 per cent, have been among the best-performing cryptocurrencies.
Investors seeking similar windfall returns must sift through hundreds of cryptocurrencies, each with its own set of specialities and degrees of usage, acceptability, and potential. In a varied market worth more than US$2.6 trillion, how can investors determine which cryptocurrencies to invest in? Moreover, which cryptocurrency will be in the news in 2022? Will cryptocurrency go on the rise, or will it fall? So, this year is coming to an end, and there are more such questions that people are still looking for?
How to start investing in 2022?
If you keep up with financial news, you are probably aware that many investors have profited handsomely from cryptocurrencies this year. So, you will also want to join in on the fun. Thus, it would be best to consider adding cryptocurrency to your investment portfolio for this purpose.
But, before moving on to that, there are some essentials you need to take care of.
Complete your research
The term “cryptocurrency” encompasses a broad spectrum of digital currency. Some of the more well-known ones, like Bitcoin and Ethereum, may be more recognizable to you, but there are many more. Do your research before investing in cryptocurrencies, and don’t assume that the most popular coins are the best ones to put your money into.
Get familiar with the risks.
No such thing as a risk-free investment opportunity exists. Cryptocurrencies are notoriously volatile. Although stocks are explosive in their own right, the value of digital currency changes more dramatically than shares. So, make sure you’re ready to deal with digital money before adding it to your portfolio.
Identify your needs and wants
Buying stocks and holding them for 40, 50, or 60 years has made many wealthy. On the other hand, Bitcoin does not have the same track record; it simply has not been around long enough. As a long-term investment, digital currencies are risky because they have only been in use for a little more than a decade. This isn’t to say you can’t use it like one, but it’s a good idea to plan how you’ll use cryptocurrencies ahead of time.
Save some emergency funds.
You incur the risk of losing money when you invest. Because cryptocurrency is riskier than traditional investments, it is vital to be financially prepared before investing. Thus, it would be best to examine your savings account balance to ensure that you have enough money to last at least three months. Start saving for an emergency fund if you already have one before investing in bitcoin or stocks.
Ensure if you are doing right by investing in Crypto
Bitcoin may look to be the most popular investment in 2021, but that doesn’t imply it’s good for you. Thus, it would be best to take your time instead of submitting to peer pressure. Moreover, search for better ways to invest your money in the coming year.
Also, if you’re going to dabble with cryptocurrency, you should take it carefully at first. This may mean investing 5% of your portfolio in cryptocurrencies while keeping the rest of your brokerage account in stocks, bonds, and exchange-traded funds (ETFs). Investing in cryptocurrencies has the potential to make you incredibly wealthy. But, before you go in, make sure you’re comfortable with your decision.
Also Read: Benefits that any industry can acquire by applying blockchain technology!
