Bitcoin’s astronomic rise last year gave many investors FOMO–fear of missing out–as it made millionaires of early investors. While the bitcoin bubble has burst, and prices have dropped far below the all-time high, there are still many reasons to invest in cryptocurrency.
Why You Should Invest in Cryptocurrency
“Getting rich” may be what first comes to mind when you think about investing in Bitcoin or its alternatives. While you may indeed get rich from digital currency investments, there are many other reasons to invest.
With the turbulence in the stock and bond markets, diversification is the buzzword that should be on every investor’s mind. If you are only invested in stocks and bonds, then you’ve probably seen the year’s gains erased in the recent dips.
While savvy investors know not to panic and sell when the market falls, savvier investors understand that a diversified portfolio prevents them from outsize suffering in times of trouble. Investing even as little as five percent of your portfolio in something like Bitcoin can provide a buffer against the next market dip.
Bitcoin and other cryptocurrencies also offer a hedge against inflation, which is of concern at present. Unlike other investments, cryptocurrencies are not pegged to the value of the dollar. When the dollar loses worth in times of inflation, your other investments decrease in value. With digital currency, the value of your investment functions independently of the dollar, so your investment can grow no matter how strong or weak the dollar is.
Some analysts see the real future of money in these digital currencies. Already, many areas function as cashless societies with payment apps, credit cards, and debit cards replacing cash payments. Bitcoin, Ethereum, and other digital currencies simply extend the trends that are already in place. If you get in now, you’ll still be getting in on the ground floor of where cryptos are headed–and that means plenty of room to rise.
Finally, it’s fun to trade in Bitcoin, Bitcoin Cash, or other cryptocurrencies. No matter what your budget is, you can find a cryptocurrency that you can afford without leveraging your other assets. While there’s never a promise of a good return with any investment, including cryptocurrencies, there is definitely the potential to get in and earn big. Plus, making the investment isn’t not as hard as you might think, either, due to a suite of apps that let you make the trades.
One note of caution, here: ICOs or initial coin offerings may tempt. Somewhat like the stock market’s initial public offerings, these events have a lot of hype–and also a lot of scammers. Unless you really understand what’s on offer, you should steer clear of ICOs and look for digital currencies that have been proven or new offerings founded by trusted experts (like Bitcoin Cash).
With any investment, you should always weigh the risks of investing against the potential rewards. Cryptocurrencies may be trading down after last year’s high, but they still offer rewards for willing investors. Given the worrisome state of the market recently, now is an excellent time to begin researching digital currencies as a rebalancing tool and wealth generation vehicle.