As cryptocurrencies grow in terms of accessibility, they are slowly becoming a much more common investment option, but is bitcoin a good investment? This seems to come down to a matter of opinion and your level of confidence in a cryptocurrency. For most people, digital currency investment will be a good idea, provided you do your research and develop strategies or let professionals do so for you.
But why? Let’s find out.
The Good and Bad of Investing in Cryptocurrency: Pros and Cons
As you look for reasons why to invest in cryptocurrency, you will find both positives and negatives. Consider both sides, as crypto investing provides numerous opportunities, but it also comes with risk.
|Potential High Returns||Volatility Can Increase Risk|
|Volatility Can Lead to Large Profits||Irreversible Transactions|
|Reduced Time Horizon||Potential Learning Curve|
|High Liquidity and 24/7 Trading|
Pro: Potential High Returns
One of the most significant advantages of digital currency investment is the potential for incredible profits. The potential for profits is particularly great if you invest in an up-and-coming cryptocurrency when it is still in the early stages. You do not need to look any further than Bitcoin to see the degree of exponential returns you can have. Of course, that type of growth is rare and takes time, but there are still plenty of other cryptocurrencies that have experienced substantial growth.
Pro: Volatility Can Lead to Large Profits
Investing early in a promising cryptocurrency is not the only way to make a dramatic profit. Because the market is so volatile, they are near-constant opportunities to buy low and sell high, leading to significant gains.
Pro: Reduced Time Horizon
Another consideration when asking yourself why invest in cryptocurrency is the shorter time horizon of crypto investments compared to other types of investments. Essentially, when you invest in an ICO or established cryptocurrency, you are likely to be able to cash out your investment fairly quickly. Some of this comes down to the previously mentioned volatility, but the crypto market growth is also a factor.
Pro: High Liquidity
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Compared to other types of investments, cryptocurrency tends to have higher liquidity. This is particularly true when you compare ICOs to IPOs, although it will vary by currency. The liquidity means that you can easily and quickly transfer cryptocurrency, at least to a greater extent than other investments.
Pro: 24/7 Trading
Another reason many people wonder should I invest in cryptocurrency is the fact that you can trade it 24/7. This comes from the fact that there is no central authority regulating cryptocurrency, unlike stocks or other instruments.
One of the biggest appeals of investing in cryptocurrency is the anonymity that comes with it. The blockchain is anonymous, and no one can tell who owns how much cryptocurrency. Many of the trading and investing opportunities for crypto are also anonymous or require minimal identity confirmation.
You can also choose to give up some of the anonymity for increased security. Some investment platforms, for example, require KYC or AML information and, in exchange, have stronger protections on your funds.
Con: Volatility Can Increase Risk
Remember that volatility is a double-edged sword. While it can lead to excellent profits, it also increases your risk. With cryptocurrency prices fluctuating so much, it is easy to lose everything if a coin drops or a bubble bursts. This is why most crypto investors suggest beginners only invest what they can afford to lose.
Con: Irreversible Transactions
If you were to invest in cryptocurrency yourself, you need to understand that blockchain transactions are final. There is no way to return your funds if you send them to the wrong account. This is great from a security standpoint, but it means that if you make a mistake, you are out of luck. Overcoming this con is as simple as taking extra care during transactions.
Con: Potential Learning Curve
Another caveat that is easy enough to overcome but requires consideration is that learning how to invest in crypto currency comes with a learning curve. While some of the strategies overlap with other types of traditional trading, it is a new concept. If you plan to do the research yourself, you will need to learn to read charts, analyze information, and always stay up-to-date on the news.
How Bitcoin Can Be a Good Investment
Even though bitcoin is at the “high-risk” end of the investment spectrum, it’s a great opportunity for long-term value investment. There can only ever be a maximum of 21 million bitcoins, and there’s a really high chance for humanity to accept bitcoin as an asset instead of gold.
It’s started already, central banks are working on the regulations, so this can be the time to take action with little steps that will cost nothing.
Day Trading isn’t the only option, here are the other ways
You don’t have to wait till the price goes up to make a profit from bitcoin investment. You have lots of options thanks to the freedom that makes companies innovative. But let’s start with basic bitcoin investment strategies and let’s continue with our solutions.
With this strategy, you take the total amount you plan on investing and divide it into pieces. You then invest one of those pieces on the same day of the week at the same time every week. So, instead of investing $1,000 all at once, you could invest $100 a week every Monday at noon for 10 weeks.
The idea is that by dividing your initial investment across time, you will minimize the impact of the market volatility. You can even take it a step further and only invest if the prices are red.
Golden Cross or Death Cross
To use this Bitcoin investment strategy, you need to use moving average indicators, specifically the 50 MA and 200 MA, which are averages over the past 50 and 200 days, respectively. You look at longer time frames and look for where the two indicators cross over each other. Convergences or golden crosses (the 50 MA crossing above) are a signal to buy. Divergences or death crosses (the 200 MA crossing above) are a signal to sell.
Once you gain more technical skills, you can also opt for the Bitcoin investment strategy of RSI divergence. This strategy helps you spot trend reversals, so you can take advantage of them. The RSI or Relative Strength Index is an indicator measuring momentum. It lets you know if an instrument is oversold or overbought, which is when it gets below 30 or above 70 (out of 0-100), respectively. These indicate that the price is likely to rise and drop, respectively.
Invest without worrying about completing your analysis.
To invest in cryptocurrency, you do not have to become a day trader or spend all of your time researching the best new cryptocurrency to invest in. Haru Invest is a great alternative, letting you invest your cryptocurrency while leaving the decisions and analysis to the experts.
One of the great things about Haru Invest is that you do not need to know much about the cryptocurrency market, as the algorithm and experts involved take care of everything. You also do not need technical or coding skills, as the Haru Invest team coded the algorithms. You get to take a hands-off approach. Haru Invest can appeal to everyone, thanks to its minimum investment of just $10. A similar service from a competitor requires at least tens of thousands, if not more.
The Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.