Does Cryptocurrency Deserve a Spot in Your Investment Portfolio?

Today, technology and the internet have made investing a far more accessible pursuit than ever before. Additionally, there are so many new assets and industries in which to invest in. Perhaps one of the most potentially lucrative avenues is the cryptocurrency market, especially with all the success stories circulating online. It only takes a glance to see that the prices of crypto are indeed rising and falling at massive rates, and there’s a chance that investors could hit it big with these digital currencies if they play their cards wisely.

When first getting into the world of crypto, investors may be overwhelmed to find thousands of different types of coins to invest in. That’s not to mention the amount of necessary research for familiarizing oneself with each crypto, as well as the decision of which crypto wallets to go for. In general, each type of wallet holds certain types of coins, such as XMR Wallet for holding Monero and Multidoge for Dogecoin.

The overwhelming nature of digital currencies may lead investors to wonder if it’s even worth the trouble of getting started. If you’re one such interested investor, how do you know if crypto is an asset you should add to your portfolio? Here are some considerations that can help you determine if you should take the leap and put your hard-earned money into cryptocurrencies:

It’s a general rule of thumb for investors not to put all their eggs into one basket. In other words, they mustn’t place all their funds into one investment vehicle. There’s a better chance to gain if there’s a variety of investments, particularly if all of them are in largely unrelated industries. This assures that performance in one asset will not affect the value of the other.

Fortunately, cryptocurrency has already been known to not be significantly affected by the traditional stock market. Conversely, anyone who has already placed money on stocks will be glad to know that these assets are usually not impacted by the performance of the cryptocurrency market. In this regard, one can consider digital currencies to be a way of diversifying their investment portfolio and ensuring that all their money doesn’t drop in value in the blink of an eye.

For most traditional assets, the sole concern tends to be how much is invested and how this value changes over time. While these concerns still apply to cryptocurrency, there’s much more to consider than just the costs and earnings of each coin.

Essentially, the success and value of a coin rely on its usage and userbase. This is why many crypto investors promote the use of the coins they’ve invested in. Their end goal is to grow the community of people who believe in their coins of choice. At the same time, getting the word out can develop the prominence of a coin, making it a worthy contender for global digital currency.

To some extent, investors can be aggressive with their buying and trading activities, usually when the market for an asset is predictable. Put simply, a predictable market means one can reasonably buy low and sell high in relatively quick, short-term bursts. However, this is not quite the case for the crypto market, as digital coins are high-risk assets that are much more unpredictable when compared to traditionally aggressive investments.

This isn’t to say that investors can’t make a pretty profit off of crypto by actively buying and selling. However, as with most other aggressive investments, most experts recommend treating digital coins as long-term investments. In other words, an investor must be ready not to touch the money they’ve put into a cryptocurrency for several years if they’re hoping to make substantial returns.

When comparing traditional assets against cryptocurrency, the value propositions of digital coins make them attractive vehicles for investment. Generally speaking, the value of a stock is closely tied to the value of the product or service provided by the company offering said stock. With cryptocurrencies, investors believe the coins themselves will usher in a forthcoming revolution in the finance and tech industries.

Because of this, crypto forecasts often have less to do with usual marketing statistics such as sales reports. Instead, investors assess whether the developers of a particular coin can achieve any of their objectives for their vision of universal finance. In short, it’s best to invest in a coin that has some sort of end goal in mind, typically one tied to digital transformation. Conversely, it may not be practical to put money into crypto that was only created in the hopes of attracting investors and not much else.

Given the points above, one may want to err from treating digital coins in the same way as any other type of traditional investment vehicle. Rather, putting your money into cryptocurrency should be viewed as an investment into the future. Although this money may be inaccessible for a long while, the true potential returns on investment will eventually come. Expect to wait for at least a decade before seeing the fruits of your crypto portfolio, when today’s coins will hopefully experience increased circulation and usage in the years to come.