Should You Get Involved in the Cryptocurrency Craze?

Bitcoin is back in the news with it reaching highs we haven’t seen since its highly publicized rally in late 2017. This has pushed cryptocurrencies to the forefront and many new investors are starting to think about them as an investment and store of value. Others may be fearful for the future of the economy, and many have extra money to invest with the combination of stimulus packages and fewer opportunities to spend.

Cryptocurrency can seem like an interesting investment in the medium and short term, but should you get involved in the cryptocurrency craze?

The Uncertainty of Cryptocurrencies

Cryptocurrency is a very different type of asset and doesn’t behave like other financial instruments. In the case of Bitcoin, for instance, its price is subject to the forces of supply and demand, nothing else. This means that there are no central bank announcements, unemployment numbers, or trade deficits that can directly influence it. Its movements are often cryptic, even to those in the sector.

With that being said, uncertainty with cryptocurrencies goes both ways, and as it can go down, it can also go up. For reference, Bitcoin went from under $5,000 in March to over $40,000 in only 10 months. There aren’t many assets that will give you this kind of return that fast.

Cryptocurrencies as Store of Value

What’s interesting, however, is that it seems like cryptocurrencies are starting to finally fulfill their role as stores of value. We can’t deny that the recent events seem to be one of, if not the most important, factors for the latest Bitcoin jump. It has also outperformed gold recently. The issue is that we still don’t know if it’s oversold at the moment and what its true baseline is. But we might learn very soon as Bitcoin could start to stabilize, and this could be the right time to enter if your goal is to use it for that purpose.

Approaching Cryptocurrency as a Beginner

If you’re going to invest in crypto, then you have to take a sound approach. First, we strongly suggest that you don’t invest more than a small portion of your assets in crypto. 10% would be a reasonable amount.

You have to approach crypto like a real investment. This means that you’ll need to know a few things about how to read a candlestick chart and learn how to use technical indicators like stochastic and the RSI at the very least.

Next, you have to know about wallets and exchanges. Wallets save your private and public keys. Your private key, in particular, needs to be a secret and the wallet is there to protect it. Wallets can be virtual, on a device, or physical, like a USB key or even a piece of paper. It is suggested that you divide your coins and use different supports for security and in case of loss.

Last but not least, you must get familiar with exchanges. There have been examples of exchanges that went down along with the funds. So, before you pick an exchange, it’s very important that you do your research first. If you want to find a reputable exchange, market place fairness made a list of the best exchanges you can trade on. We also suggest that you don’t leave your coins stored on any exchange and use your wallet instead.

Cryptocurrency could indeed be one of the best asset classes now and for the future. However, you must come in with a solid foundation and plan in place. You also need to delve deeper than the surface if you want to find more opportunities.

The post Should You Get Involved in the Cryptocurrency Craze? appeared first on Home Business Magazine.

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