Is it worth investing in cryptocurrencies right now?

“The time to buy is when there’s blood in the streets,” goes the famous stock market adage once attributed to baron Rotschild. That’s how the most famous member of the banking family, whose name is known to almost everyone, made his fortune. But does this answer the question of whether it’s worth investing in cryptocurrencies right now? Perhaps, although that question is more complex than it seems.

Before we start investing in anything, we need to remember how important diversification is—that is, spreading capital across different assets. Ideally, these assets should not be correlated, or even better, should have negative correlation. Properly executed diversification should ensure that at least some of our assets will increase in value when others are declining. In such a context, it’s impossible to ignore virtual currencies, that is, cryptocurrencies.

Taking risks pays off, but it’s worth minimizing them

Cryptocurrencies are considered risky assets—and they truly are, especially if you’re not quite sure how to approach them. In investing, risk can be seen in two ways: either as something negative, or as a “springboard” that can potentially deliver very high returns. If your portfolio already includes bonds, precious metals, real estate, stocks, ETFs, and similar assets, you might consider adding cryptocurrencies. That’s precisely because, at the right moment, they can become exactly that “springboard” for your portfolio.

In a bull market, good cryptocurrency projects typically deliver returns of several hundred percent. This means that investing 1% of our capital in such a risky market can, at the right time, result in that 1% no longer being just 1% of the portfolio, but 5% or even 10%. Not because we’ll start adding more capital to these assets out of greed, but because a crypto bull run can multiply that initial 1%.

Is it worth buying Bitcoin?

Based on another piece of stock market wisdom that says you should “never jump on a speeding train”, we can conclude that it’s not worth waiting for a bull market—the “train” is already moving fast by then. It’s safer—though admittedly less comfortable—to board the “train” while it’s still waiting at the platform… and empty, because everyone else is too afraid to get on. Of course, entering the market during a bull run can still be profitable … the problem is, we never really know exactly when that bull market is happening and—most importantly—when it will end.

At the time of writing this article, Bitcoin is priced at around 28,000 dollars per coin. Since its last peak, the “king of cryptocurrencies” has dropped by nearly 58%, which means that if the largest cryptocurrency by market cap returns to its previous ATH (All-Time High), any capital invested in BTC now could double in value or even multiply further if new highs are reached. For smaller cryptocurrencies, the returns could be even greater.

The question is, is there blood on the streets right now? Probably not. There was definitely blood in the last quarter of 2022, when Bitcoin hovered around $16,000. Those who bought back then are already almost twice in profit. Should you buy now, or wait for another opportunity when there’s blood on the streets again—maybe even more than last time? That’s a decision everyone has to make for themselves.

The content of this article does not constitute investment advice. Remember to make investment decisions based on your own judgment, knowledge, and experience.