Why You Should Invest in Cryptocurrency in 2023
The most important fact to keep in mind is that the number of cryptocurrencies more than doubled from 2021 to 2022. While the crypto space has exploded in the last few years, prices have dropped significantly from their all-time highs in November 2022.
The lower prices may have scared off investors, but it also creates new investment opportunities. This is why it’s important to understand the current marketing conditions and take advantage of the opportunity to invest in cryptocurrency.
Interested in diversifying your portfolio with crypto this year? Here’s a helpful investment guide to help you find the right investment for you.
The Current Crypto Market
It’s no secret that the current crypto market has taken a beating over the last year. However, it’s important to remember that the current prices are still higher than they were before the pandemic. This means that if you invested in crypto in 2019, it’s possible that you’re in the green.
Crypto has been around for well over a decade. Bitcoin is often referred to as the first major cryptocurrency as it dates back to 2009. This cryptocurrency was relatively unknown as early adoption took a while to pick up steam.
However, Bitcoin stepped into the spotlight in 2017. This saw the price of Bitcoin climb throughout the year to a peak of over $19,000. While this price didn’t stick around long, it managed to make cryptocurrency a popular topic within the fintech space.
This saw crypto exchanges hundreds of other cryptocurrencies pop up. However, Bitcoin still dominated the space with a majority of the market cap.
Historical Highs
The price of Bitcoin rose steadily from the lows of 2018 through to the end of 2020. It was in late 2020 that the prices began to skyrocket, reaching an all-time high of over $61,000 in March 2021. While the price did fall temporarily, it quickly rose again to a high of over $64,000 in November.
This massive rise was based on a few economic factors. The pandemic was in full swing and retail investors took the extra money they had to investment platforms. This saw billions of dollars enter the market through retail investment apps like Robinhood.
Institutional investors followed and started diversifying their portfolios with crypto. Since the pandemic had a major impact on the rest of the economy, institutional investors were looking for something to hedge against possible inflation. This is where crypto skyrocketed.
However, the party was short-lived as things calmed down in 2022. Institutional investors pulled out to prepare for inflation and other economic opportunities. The cost of living crisis caused retail investors to cash out as well, sending the price plummeting to the ground. This saw the price of Bitcoin drop below $17,000 in November 2022, just one year after its all-time high of $64,000.
The Economic Impact
The primary cause of the crypto crash is the current economic climate. While the pandemic was supported by stimulus bills, inflation followed without warning. This caused the price of everything to go up, causing retail investors to panic.
The war in Ukraine didn’t help either. Russia’s invasion saw the price of oil climb to new heights. This puts even more pressure on businesses and people around the globe. This is why so many businesses, corporations, and stocks crashed. While we may have thought of Bitcoin being independent of these market conditions, the individuals holding Bitcoin were not. This is what motivated a selling spree for all kinds of crypto.
Why Invest In Cryptocurrency?
As mentioned above, the entire crypto market is down right now. While many may think of this as a bad thing, it’s actually a great time to invest. Here’s a quick look at why you should consider investing in cryptocurrency this year.
Prices Are Low
One of the clearest reasons to invest in cryptocurrency this year is the fact that prices are so low. This means that you can buy into the market at a massive discount. Even if prices just go up to November 2022 high, you will effectively triple your money! Alternative Asset Cryptocurrency is an alternative asset that’s not directly linked to any security, currency, or asset. This means that it’s a great way to hedge against the traditional economy.
Diversify Your Portfolio
When it comes to building an investment portfolio, diversification is key. If you’re looking for additional asset classes to invest in, crypto is one of the best. This is because crypto is simple, easy, quick, and affordable to invest in.
The current crypto prices are incredibly low, giving you exposure to massive upsides at the same time. This way, you can diversify your portfolio, lower your risk profile, and expose your portfolio to massive upside potential.
Easy Transactions
When it comes to buying and selling crypto, it’s never been easier. You can buy crypto on your computer, smartphone, or tablet, anywhere in the world. There are even Bitcoin ATMs that you can use to quickly transact online.
This is a major advantage over other investments as you will still have instant access to your funds if you ever need them. Additionally, should you decide to close your crypto.com account or any other crypto account, the process is generally simple and straightforward, ensuring that you remain in control of your investments at all times.
Secure Network
Cryptocurrency is based on blockchain technology. Many experts agree that blockchain technology is far more secure than the databases that banks use to keep track of your money today. This is why investing in crypto is the safer, more reliable option.
International Payments
If you have ever sent money overseas, you know how difficult and time-consuming the process is. In most cases, the funds need to be cleared by your country’s reserve bank before being converted into another currency. This takes tons of time and can cost you an arm and a leg in transaction fees.
Crypto bypasses all of this and makes international transactions effortless. This feature has not changed over the years, meaning that crypto still has this major advantage over fiat currency.
Decentralized Structure
At the heart of crypto is a fully decentralized structure. This means that there is no central authority that has the power to block, stop, or slow down transactions. Because of this, you can send money anywhere, anytime, in the blink of an eye.
Modern Innovations
The crypto space is incredible, but it’s not done yet. Fintech and crypto companies around the world are still innovating and coming up with new ways to improve the crypto market. Ethereum launched a new approach to the blockchain, slashing energy consumption by over 99% overnight.
This is just one example of the possibilities within the crypto space. In this way, investing in crypto means getting in early on future developments.
The Best Crypto To Invest In
If you’re thinking about investing in crypto, there are thousands of options available. Despite this, there are a few popular cryptocurrencies that lead the pack. Here’s a quick summary of the best crypto options for you to invest in.
1. Bitcoin (BTC)
If you know anything about the crypto space, you know about Bitcoin. As the largest cryptocurrency on the market today, Bitcoin is worth over $450 billion. Bitcoin is widely accepted throughout the world and makes it easier than ever to transact, buy, and sell online.
There are even Bitcoin ATMs around the country that will let you convert your Bitcoin to cash instantly.
2. Ethereum (ETH)
Ethereum is the second largest cryptocurrency that you can invest in today. This impressive cryptocurrency is based on an open-source blockchain. This enables developers around the world to build on Ethereum’s technology to create some unique, practical applications.
The most impressive is the programmable tokens known as smart contracts. This feature lets you attach instructions to a token before you transfer it to someone else. In simple terms, you can add an instruction that pays a royalty to you every time that token changes hands.
This is something that makes Ethereum unique in the crypto space. Ethereum has also been innovating its blockchain technology. It’s moved away from ‘proof of work’ and now runs everything with a new ‘proof of stake’ approach. This helped reduce its energy consumption by over 99% overnight.
3. Binance (BNB)
If you’re looking for a trustworthy crypto exchange, Binance is one of the biggest in the game. Binance holds billions of dollars worth of crypto and makes it easier than ever before to start investing. To make transactions easy, Binance developed its own crypto, the Binance coin.
This coin rose with the popularity of the platform and is a worthy investment on its own. It has grown over the years and is now one of the largest cryptocurrencies on the market.
Tips for Investing in the Crypto Market
Investing in the crypto market can be incredibly beneficial, but equally as risky. This is why it’s so important to understand the entire market before you make any final decisions. To help you get started, here are a few helpful tips.
1. Find a Trustworthy Exchange
When you buy and sell crypto, you do so through a crypto exchange. In many cases, you also store your crypto with the exchange. In order to stay safe, it’s important to find an exchange that you can trust with your investments.
2. Research Your Options
Before you invest in anything, make sure you understand everything. If you’re thinking about moving your portfolio to another exchange, take some time and read the fine print. This will help you understand what you’re getting yourself into.
The same goes for every single investment that you make. The last thing you want is to invest in something that turns your hard-earned money into dust.
3. Always Start Small
When investing, it’s essential to start small. This is why many experienced investors recommend only investing around 1% of your entire portfolio in crypto. While other experts suggest between 5% and 10%, the core principle is to start small and stay diversified.
4. Diversify Your Portfolio
As mentioned above, it’s always a great idea to diversify your portfolio with crypto. However, you can diversify your holdings even further within the crypto market. This means you don’t have to put all your funds into Bitcoin, you can distribute your investment between Bitcoin, Ethereum, and other cryptocurrencies that you believe in.
This is the best way to reduce your overall risk while still gaining exposure to the market.
5. Stay in The Loop
The crypto market, much like the traditional stock market, can shift overnight. This is why it’s so important to stay updated with the latest news. Keeping an eye on the news will let you spot new opportunities early so that you can adapt to take advantage of them.
This can also help you stay clear of trouble. In many cases, it’s better to take the safer option and cash out before you’re left holding the bag.
Diversify Your Portfolio with Cryptocurrency
It’s no secret that the crypto market is not doing very well at the moment. However, there are a few key reasons why you should still invest in cryptocurrency in 2023. The low prices make it a great investment opportunity, but it’s the underlying technology that makes it so valuable.
Ethereum changed the game when it launched its new blockchain model. That single update alone is going to save billions of dollars in energy costs. This showcases the wide range of possibilities of crypto, and why you should consider investing in crypto this year.