If you have some cryptocurrency that you use on a regular basis – whether for making purchases, playing at bitcoin casinos, or placing wagers at websites that offer sports betting with crypto – you may also be wondering if you should be making some investments. If this is the case, then before you start adding any digital currencies to your investment portfolio, here are 4 things you should consider to make sure it’s really the right option for you.
1. Cryptocurrency is volatile
The main reason to take a pause and think things through before you invest in any form of cryptocurrency is the sheer volatility of the crypto market. If you take a look back over the last year alone, you will see steep peaks and troughs in the value of different cryptocurrencies. Bitcoin alone has plummeted sharply since it reached lofty heights in November 2021, and other digital currencies like Ethereum have also fared poorly in the current global economic situation.
This volatility may seem like an exciting risk to some people, but, to others, it will probably spell a poor investment opportunity. The fact is, you never know when your crypto holdings will suddenly plunge in value, and this is something that is very likely to happen, rather than being a remote possibility. If you’d still like to take a chance and ride the waves of digital currency’s volatility, financial advisors warn against dedicating more than around 5% of your investment portfolio to crypto.
2. Research is key
When it comes to investing in anything, a little research is always a great idea, and that certainly applies to the world of cryptocurrency, which is still a relatively new phenomenon. Before you take the plunge and invest any of your hard-earned cash, take some time to do some background reading – not just on cryptocurrencies but on blockchain technology in general. This will give you a solid foundation of knowledge with which you can make your investments.
3. Consider why you would like to invest in crypto
It’s always a good idea to consider your motives for investing in anything. For instance, are you eager to invest in a cryptocurrency such as Bitcoin or Ethereum simply because it seems like the trendy thing to do, or do you have a particular insight that makes a crypto investment seem like the logical next step for your portfolio? With so many other more stable options to choose from, it’s worth re-examining your goals before you commit to crypto.
4. Never lose your keys
While this is always sound advice when it comes to any form of key, it’s particularly relevant when talking about the private key phrase that unlocks the digital wallets where your cryptocurrency is stored. Make sure you write them down so you cannot forget them, and ensure that no one can access them. If someone discovers your key they can unlock your crypto wallet and steal all of your digital currency, so that you are left with nothing.
Taking the plunge?
As you can see, there are a number of crucial things to consider when investing in cryptocurrency. At the end of the day, the best advice is to proceed with caution and never invest more money than you can easily afford to do without.
