Cryptocurrency has grown in popularity as an investment alternative, piquing the interest of many investors.
Despite the market’s notable volatility, many investors have been drawn in by the possibility of large gains. As not everyone is comfortable with high-risk investments, there are strategies to consider before making your investment decision. This article looks at some of those strategies.
Understand what you are investing in
Before investing in any cryptocurrency, it’s crucial to comprehend the distinctive features of any cryptocurrency, just as you would research a company before purchasing its stock. According to CoinMarketCap.com, there are over 24,000 cryptos on the market currently, which provides a wealth of options for anyone looking to invest. However, it’s crucial to educate yourself about cryptocurrency first to determine if it is a good fit.
A critical part of understanding the crypto industry is keeping an open eye on trends that contribute to the volatility of cryptocurrencies. For accurate forecasting, most traders, analysts and investors use a prominent tool like the economic calendar that shows current trends and events.
As a crypto investor in the UK, the economic calendar aids you in keeping track of global economic events that may impact the financial markets. Plus, the simple layout of the calendar allows users to filter by country or event importance, tracking forecasts and trading news.
Investing in Index Funds
Crypto investment arguably comes with the most risks among other financial investments. The index fund holds a diverse portfolio of cryptocurrencies, serving as a safe haven in case of a crash in crypto value. Hence, investors can access the cryptocurrency market without having to choose specific coins or tokens.
The index fund is made to track an S&P 500-style financial market index and may be the best bet for retirement savings accounts like IRAs and 401(k)s. Overall, investing in a cryptocurrency index fund allows investors to avert the risk of investing in a single cryptocurrency, as their investment is dispersed across numerous assets.
Stablecoins
Stablecoin is a form of crypto anchored to a reliable asset, such as the US dollar. Since their value is based on a less erratic asset, they are less volatile than other cryptocurrencies. Investors can buy stablecoins in the hope that their value will be steady over time. Tether (USDT) is the most widely used and valuable stablecoin in terms of market capitalization.
It is backed by gold reserves, tied at a 1:1 ratio to the US dollar and frequently ranks among the top five cryptocurrencies in terms of market cap. Tether is available on the majority of the main cryptocurrency exchanges, including Kraken, Binance, and Coinbase.
Risks and Considerations
While these low-risk cryptocurrency investment options might decrease the effect of market volatility, it’s crucial to understand the risks connected with investing in cryptocurrency. The regulation of cryptocurrencies is still developing in the United Kingdom, and it’s unclear how the government will control the market at the moment.
This ambiguity entails significant risk for investors. Also, cryptocurrency is stored in digital wallets, which can be vulnerable to hacks and theft. Thus, investors should take precautions to make sure their wallets are safe and that they are adhering to recommended procedures for safeguarding cryptocurrency.
Investing in cryptocurrencies can be a high-risk, high-reward proposition. The current global crypto market cap is $1.185 trillion (+50% YTD), with a 24-hour trading volume of $48 billion (+137% YTD). Bitcoin is expected to hit 100,000 by the end of 2024, as projected by the Standard Chartered.
Before making any selections, as with any investment, it is crucial to conduct in-depth research and speak with financial experts.
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