In a regulated market environment and a market downturn, Jesse Brown, CEO of Himalaya, discusses the future of crypto in an increasingly regulated environment
Despite barely being halfway through 2022, the crypto market has experienced turbulence. Over the past few months, investors have been riding a rollercoaster of financial ups and downs, from Luna’s extraordinary fall to Bitcoin’s first dip below $20,000. Even as we head into a ‘crypto winter’, investors remain confident despite the doom and gloom outlook.
Based on findings of 160 of Bank of America’s clients, the firm’s latest report indicates that blockchain technology and digital assets are here to stay. And investors aren’t deterred by the market’s current state. Due to these factors, the bank’s leadership remains confident that digital assets will become mainstream in the near future.
Crypto is still a hot topic and investors are still eager to invest, but it’s vital to follow caution when investing, particularly for retail and first-timers.
Those trying to enter the crypto market can benefit from these practical tips.
Don’t throw money at a tweet or post the speed of message
Thousands of cryptocurrency groups and influencers are active on social media. Like in any industry, there are experts who are knowledgeable and trustworthy, as well as those who may be uninformed or untrustworthy. The speed of social media can also create a sense of urgency when purchasing something – and when your money is on the line, this is the wrong mindset.
Just because a project has a lot of noise surrounding it, does not mean it is worth investing in. Prior to investing in a crypto project, you should perform your own risk assessment using a variety of credible sources. The approach of investing in a coin’s floor price and hoping it will triple by thousands is very shortsighted.
Don’t fall for the fallacious logic that a coin will rise in price just because it seems good value. Make sure you thoroughly research any scheme that promises fast, easy cash through crypto before committing yourself.
Never invest above your financial means
A level of risk, as well as uncertainty, is always associated with investment, whether it is in crypto or traditional stocks and shares. There is an upswing and a downswing in prices. There’s something appealing about investing, and that’s all part of the appeal for many. Crypto markets have enabled some people to gain financial freedom, but they can also inflict financial stress on others. The price of Luna was a good example of how coins can nosedive quickly. It is possible for anyone to lose money on the market.
In these instances, investors can suffer heavy losses if their finances are overcommitted or if their risk is not spread correctly. It is ideal that no one invests more than they can afford – or cannot afford to lose. Traditionally, investors are advised to invest when they have three to six months’ worth of expenses saved up. Cryptocurrencies are no different. Then, if anything goes wrong with your investments, you will have a ‘plan B’ ahead of time. Cryptocurrencies won’t disappear anytime soon, so people who don’t have the funds to invest shouldn’t worry about losing them. Investing options will be available both today and tomorrow – so do not feel the need to rush. Never put your financial security at risk by investing more than you can afford to lose.
Due diligence and patience are key
It is common for investors to panic and sell after a crypto winter, especially if they are new investors or haven’t experienced a serious dip yet. There can be a lot of emotional attachment to money, and much can hinge on financial success or failure, so it’s no surprise that when hard times hit, it can be devastating for anyone who pinned their hopes on the hottest crypto project that’s now in turmoil. There will certainly be more crypto winters to come, and this is not the first. Even though Bitcoin is hovering around $20,000 now, it has had significant gains over the past two years. As an investor, you should conduct due diligence and ask yourself, ‘what am I hoping to gain from this?’ are important questions that are often overlooked.
Are you attempting to catch a cheap coin at its floor price in the hope it will rocket? or are you following long-term, progressive projects in the crypto space? A key distinction between success and failure in this market is understanding the difference between a legitimate investment and gambling your money.
Never lose sight of your goals
Investors can experience nerve-wracking and testing times during crypto winters. There are volatile crypto winters that will come and go, but crypto is still a young, unregulated market. Despite the buzz generated by crypto, there is a lot of noise and potential for fraud associated with it. Being patient and doing your homework is essential to your success when navigating the market, especially in this current bear market. To achieve financial freedom, always invest within your means, don’t invest your money on a Tweet, and never lose sight of why you got into crypto.
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