Is Crypto A Good Investment: Read our analysis on if Crypto is a Good investment or not.
Cryptocurrencies have been one of the hot investments in the last 2 years with more investors taking interest in cryptocurrencies. However, the crypto market is very much unpredictable and volatile. In the last 6 months, the market has fallen over 50% and there has been no sign of improvement. Therefore, a question arises, “Is Crypto A Good Investment”?
Before we discuss, whether Is Crypto a Good Investment or not, let us first discuss the risks involved in crypto investment.
Is Crypto A Good Investment: Risks Involved
Volatility: One of the biggest risks involved in crypto investment is the volatile nature of the crypto market. There are chances of making high gains within few days and there are chances of losing everything in just few hours.
Bitcoin for example was trading at over $60K in November 2021. This might have given a large number of Bitcoin investors a huge gain but now Bitcoin has lost over $40K since then and this has resulted in investors losing big time on Bitcoin investment.
Control: Despite the crypto developers assuring huge security the control over crypto assets still not fully in the hands of investors. Crypto exchanges may take the advantage of the decentralized nature of cryptocurrencies. They may freeze your complete investment if a Government of the hour asks it to do or sometimes it may freeze your investment if the exchange starts to make losses. Eg. Celcius recently stopped withdrawing and sell of cryptos from its exchange.
Government Policies: One of the biggest risks in crypto investment is Government policies. Despite the decentralized nature of the information available publicly it becomes highly difficult to track the transaction of cryptocurrencies. Therefore, government around the world has been trying to regularise crypto investment by framing rules. Some governments like China have banned cryptocurrencies completely. The continuous change in Government policies has also affected crypto investments.
Security and Scams
Security has been one of the factors that have come into play. Crypto developers have been working to increase the security of their blockchain but have failed multiple times. For example, the Solana blockchain has been hit by scams and security flaws regularly.
Added to scams have also affected the crypto market widely. The recent Terra Luna fiasco is the latest example. Over 90% of the investors in Terra Luna have lost their investments.
Is Crypto A Good Investment: Why You May Invest In Cryptos
Despite the risk involved, the crypto investment could be a good option but it must be kept in mind that to make a good earning it is advisable to be part of a long-term investment in cryptocurrencies.
Adoption: Cryptocurrencies have now become a part of the life of a huge population around the world. With growing demand, the adoption of cryptocurrencies has also increased. Countries like El Salvador have already made Bitcoin a legal tender. Even Russia is mulling making Bitcoin legal. Many brands around the world have adopted crypto payment. With the passage of time, it is expected the adoption of cryptocurrencies will increase.
Increase in Utility: The cryptocurrencies are no more just a but have turned into an ecosystem. With the blockchain industry expanding, cryptocurrencies have become a major catalyst in it. From metaverse to Defi to dApps, the crypto world is now diversified. 100s of projects are being built on the crypto blockchain. Therefore the future of any token may depend upon its ecosystem in times to come.
Profit: Investing in cryptocurrencies involves a lot of risks but the profit may also be huge if things work in favor of your investment. Within a few days, investors could be able to multiply their investment by 10 folds. This happened in 4th quarter of 2021 when the overall crypto market cap went over $3T.
Is Crypto A Good Investment: Conclusion
Crypto investment involves financial transactions therefore it is advisable to make all background surveys before making the investment. Added to it, if an investor is looking a greater profit, the investor should be prepared to play a long-term game instead of exiting the market when some turbulence occurs in the market.
Cryptocurrency offers a lucrative profit but just because of fear of missing out one should not invest in cryptocurrencies. It is advisable to understand the market to study the cryptocurrencies and also to know that the return of your investment may take longer than expected.
However, we can say that crypto is a good investment if it is a long-term investment but one should also be prepared for the worst.