Cryptocurrency trading over the years have been both remarkably profitable and at the same time been very disastrous for those who just went by the hype surrounding the market.
But, is that how the market is, or is it the way we misinterpret the lack of knowledge of the investors.
Today we will bust some of the myths surrounding the market.
1. Investing in Crypto / Bitcoin is risky
Certain groups of people consider Crypto Trading or Investing in bitcoin is more like betting and there are heavy chances of losing. But, is that true?.
The gambling analogy is not entirely true for crypto, unless you complete overlook the basics:
This depends on three very important factors,
- Lack of project research
- Selling at loss (FUD)
Lack of Project Research:
When you invest into projects,into a project without knowing about their backgrounddeep research into the team, goals, financials, experience, and connections, future goals, team, and their financials, your investments are subject to more than usual risk in most of the cases.
Fear of Missing Out(FOMO), is a term used mostly in trading and investments, where people tend to invest into the hype surrounding the projects with a belief that they might miss the opportunity. For eg: During the 2017 ICO craze there have been many such scenarios, where the tokens were sold out in a fraction of seconds. But, not many projects have survived in the long run. most of these projects burned to the ground taking investor funds with them while some made a run with the money scamming people.
Selling at Loss (FUD)
Whenever there is a rumor or a bad news across the market, people tend to give in so easily and sell their holdings at a loss, with a fear that they might lose much more, and there are occasions, certain communities or groups create a fear among the investors and make them sell at lower prices and fill their bags at dirt cheap. This type of unethical practice happens a lot in the crypto space due to lack of regulatory oversight (which is changing quickly).
Being a relatively new asset class, crypto investing is inherently risky, more riskier than traditional markets, however, there are gems hidden in this pile of shite and investing in those gems could prove to be very lucrative and might act as hedge against the crash of traditional market (like what we are seeing now with corona pandemic). So, is investing in Crypto/ Bitcoin risky? YES and NO. Yes for those who succumb to the above factors and NO, for those who Invest into the projects that they believe in after a proper research and they can handle certain downs in the market and can hold on to their holdings till the market is back to its highs.
Yes, it is risky to invest in crypto so is investing anywhere and with any investment proper research could help protect and grow your investment. The opportunities to grow investment in crypto are multi-fold compared to the traditional market.
As you can see any good project, over a certain period of time, it may have many highs and lows, but on a larger picture, it is always a good investment.
Note: Try to stay away from investing when the prices are rising at a rapid pace at ATH(ALL TIME HIGH).
2. You need to have a strong knowledge about finance
You don’t need a finance degree to trade crypto. You do need to have in depth knowledge about the projects you are investing in.
There are certain things you need to look into before investing in any project:
- Knowing the project and its competitors
- What problem is this project solving?
- Does the team have the experience and connections to pull it off?
- Addressable market size – is the market saturated or niche, is it big enough to accommodate success of more than one project?
Tip: If all of the above factors work in your project’s favor – then temporary market ups and downs don’t need to cause panic since in the long term the project will find its ground.
3. Small Investors Cannot make big profits in the market
With crypto being very new, and millions of new traders looking to get into it, the dividends in the crypto tradings can be phenomenal. Even with small investments and the right approach you can still get very good profits.
One of the best ways to get staggering profits is to invest into new and small promising projects emerging into the market and grow your investment with the project’s performance. This requires a lot of research and time.
If you can’t spend so much time researching – you can always invest into proven projects. Beauty of crypto is you can invest $10 or $10000, there are no minimums generally speaking. This is a game changer for small investors. $100 in the right project could over a period return unimaginable returns in crypto. You cannot say that for the traditional market.
But mind you, Investing in any form of asset is risky, only invest what you can afford to lose. And even that is not advice, just our opinion.
Thank you for reading and sharing this article. Keep safe and healthy!
Everything in this article is an opinion, not an advice of any kind. This material has been prepared for general informational purposes only and it is not intended to be relied upon as accounting, tax, investment, legal or other professional advice. Please consult with a professional for specific advice.
We do not endorse or guarantee the accuracy of the information and claims made.
All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.