In 2021 the cryptocurrency market experienced rapid growth, and many unfamiliar faces were introduced to the world of blockchain. Elon Musk endorsed Bitcoin, Dogecoin, and Shiba Inu memes became a cultural phenomenon, and non-fungible tokens (NFTs) went viral.
Given all this exponential growth, as a new investor, you may be asking yourself essential questions:
- You may be wondering if it's too late to begin investing in cryptocurrency?
- Can you make money investing in cryptocurrency?
Here's what you need to know about investing in cryptocurrency. In this blog post, we'll help you learn about the benefits of investing in cryptocurrency in 2022.
In 2022, will it be too late to invest in cryptocurrency?
The crypto market is experiencing rapid growth, and increased institutional demand and mainstream adoption mean there are lots of new opportunities to succeed.
Whether you're a long-term investor or someone looking to trade cryptocurrency, there are several ways for you to start investing in crypto and increase your wealth.
Crypto is an exciting and growing market, with thousands of projects already in existence and many more launching every day making it a very profitable investment opportunity.
Five Cryptocurrencies to Look Out For
Did you know there are more than 1,100 cryptocurrencies in existence? But how do you find the best bitcoin alternatives? Here's a list of 5 cryptocurrencies to get you started with your investments.
- Ethereum (ETC): Ethereum (ETH) is a decentralized software platform that enables smart contracts and dApps to be built and run without any downtime, fraud, control or interference from a third party. The goal behind Ethereum is to create a decentralized suite of financial products that anyone in the world can freely access, regardless of nationality, ethnicity, or faith.
- Binance (BNB): Binance Coin (BNB) is a cryptocurrency that operates as a payment method for users of the Binance Exchange. It is the third-largest crypto by market capitalization. Those who use the token as an exchange fee payment method get a discount.
- Litecoin (LTC): Litecoin is an open-source, global payment network that is fully decentralized without any central authorities. It provides faster transaction confirmations (2.5 minutes on average) and uses scrypt as a proof-of-work (PoW) algorithm, which can be processed by consumer-grade hardware.
- Polkadot (DOT): Polkadot is a unique Parity client that connects to other blockchains. The protocol allows for the blockchain to work together. A parachain is a type of parallel blockchain that has its own native token for specific use cases. The relay chain is essential for connecting to blockchains, and it also allows for parachains.
- Tether (USDT): Tether, the best-known stable coin, seeks to reduce the volatility of other cryptocurrencies by linking its market value to that of the U.S. dollar. Stable coins can also be used to quickly transfer cryptocurrencies to fiat (government-backed) currency in order to reduce the time it takes for transactions to clear.
What strategies to you use to avoid risk?
Have A Diversified Portfolio
Diversifying your portfolio means doing research and spreading bets across a range of different assets and investment vehicles. This can include everything from stocks and bonds, to real estate, cryptocurrencies, gold, and even traditional commodities like oil.
A common betting strategy is to invest in what's known as "blue chips" which are large, well-known companies, whose shares are more stable than those of less popular firms.
Stablecoins are another option if you want to boost the overall stability of your portfolio. These coins are pegged to fiat currencies such as the U.S. dollar. Investing in stablecoins can earn you interest in some cases, but they are less risky than investing in other cryptocurrencies which have a greater potential for value appreciation.
Dollar-cost-average (DCA) to reduce investment risk
Investing in cryptocurrencies can be risky. If you want to minimize the impact of volatility, you should dollar-cost average. This means you invest the same amount at different intervals regardless of price. That way, you spread out your risk and avoid buying a large amount at one point in time, which could be especially costly due to timing.
Investing in cryptocurrency is a long-term game
Investing in cryptocurrency means being patient. You may see drops of 10% or more overnight, and you should expect more sideways movement on the charts than you'd see in traditional markets.
For example, look at what happened between May and August 2021: two months with little to no change.
But if you believe in the future of cryptocurrency, then you must be patient. It's very easy to get peer pressure or negative news about the industry, but it might simply be a temporary downturn.
Trade using centralized exchanges
We believe that centralized exchanges are a great way for beginners to buy into crypto. That's why we've outlined the top five centralized exchanges we favor Binance, Coinbase, Kraken, Gate.io, and Gemini to store crypto.
