Is it worth investing in cryptocurrencies now?

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photo: Pixabay

“The time to buy is when there is blood on the streets” – reads a stock exchange adage once said by Baron Rothschild. This is how the most famous banker family, whose name probably everyone knows, made his fortune. Is this the answer to the question whether it is worth investing in cryptocurrencies at this time? Perhaps, although there are many others to this question.

Before we start investing in anything, we must remember how important diversification is – that is, the distribution of capital in different assets. It is best for these assets to be uncorrelated or even inversely correlated. Diversification carried out appropriately However, it should give us some part of assets that will become more expensive at a time when another part of them will become cheaper. It is impossible to ignore virtual currencies in such a list, i.e cryptocurrencies.

Risk pays off, but it’s worth minimizing it

Cryptocurrencies are considered risky assets, and in fact they are – especially if we do not know how to deal with them. In turn, risk in investing can be perceived in two ways – either as something bad or as a “springboard” that can potentially give us very good results. high rates of return. If we already have bonds in our portfolio, precious metals real estate, shares, ETFs and the like, we can consider purchasing cryptocurrencies. Precisely because, at the right moment, they can become just that a “trampoline” for our portfolio.

In a bull market, good cryptocurrency projects usually provide rates of return of several hundred percent. This means investing 1% of our capital in such a risky market can cause in due time it will no longer be 1% of the portfolio, but 5% or even 10%. Not because we will start adding capital to this type of assets out of greed, but because the cryptocurrency boom can multiply this 1%.

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It is worth dividing the capital into smaller and larger parts. You should not invest much in risky assets photo: Pixabay

Is it worth buying Bitcoin?

Based on other stock market wisdom that says: “don’t get on a moving train “, we can come to the conclusion that it is not worth waiting for a bull market – the “train” is already accelerating. It is safer – although in this case uncomfortable – to enter the “train” when it is waiting on the platform… And it is empty, because everyone is afraid to enter it. Of course, By entering the market in a bull market, we can make money …the problem is that we never know exactly when this bull market is taking place and – most importantly – when it will end.

At the time of writing this article, Bitcoin costs approx. $28,000 for one coin. Since the last peak, the “king of cryptocurrencies” has fallen by almost 58%, which means that if the largest cryptocurrency in terms of capitalization returns to the previous one ATH (All-Time-High, the highest recorded value), capital put into BTC now could double in value or multiply even more if we reach new highs. For smaller cryptocurrencies, the returns can be even greater.

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BTC/USDT chart from the KuCoin exchange

The question is, is there blood being shed at this point? I don’t think so. She definitely poured herself in the last quarter of 2022, when Bitcoin was oscillating around $16,000. Those who bought then are now almost twice as profitable. Should you buy now or wait for an opportunity when there will be bloodshed again – maybe even more blood than last time? About that everyone has to decide for themselves.

The content of the article does not constitute investment advice. Remember to make investment decisions in accordance with your conscience, knowledge and experience.