Cryptocurrency is one of the blockchain applications which got popular. But it’s currently falling and a lot of investors and potential investors have few doubts regarding it. One of them recently asked me the question, “So should I be investing more in it or should I cash out everything I’ve invested?”
One of the common things you might have heard from everyone in the cryptocurrency is space is “Invest only if you can afford to lose it.” This particular line was ignored by a lot of people, they took “towards the moon” memes seriously and invested into it thinking that they’d get great returns.
Before I give my advice, I’d like you people to ask yourselves a few questions.
- Are you interested in taking more risk?
- Are you okay with losing all the invested amount?
- Do you have any other opportunities where you can invest the amount?
Are you willing to take more risk?
Cryptocurrency investments are considered to be one of the most volatile investments. Despite of a lot of technical analysis done by cryptocurrency enthusiasts, no one has been able to predict the cryptocurrency market. So you don’t know if it’s going to rise or vanish someday.
This is just like the other high risk, high gain investments, if you’re willing to take more risk then you shall consider investing into it or hold cryptocurrency. If you’re okay with less gains, then you should consider investing your money at different places such as stock market, buying digital assets or starting a business in the local market.
Are you ready to lose all the money you’ve saved?
Like I’ve mentioned above, if you’re ready to lose all the amount you’ve invested then cryptocurrency should be a place where you should consider investing your money.
It’s not investing, because when you invest your money into something, you at least know what you’re getting into. We can call it as a gamble which can either make you very rich or might even cause bankruptcy.
Besides the ups and downs in the market, make sure that you buy a physical cryptocurrency wallet such as the Ledger Nano, as the online exchanges can go down anytime and you won’t even realize when they vanish, get hacked or get compromised. Recently it was reported that Canada-based cryptocurrency exchange QuadrigaCX went missing after the death of the owner.
Do you have better investment opportunities?
If you have investment opportunities where you have complete idea about the thing, company, or person you’re investing your money into then go for it. It can actually be less risky than cryptocurrency. However, the gains also won’t be as lucrative as cryptocurrency. But there’s no guarantee that the market would go up anytime soon.
If you’re already a cryptocurrency investor then you should consider taking a share of the cryptocurrency and cashing it out and invest into something else, that way you won’t lose much on the potential cryptocurrency earnings and won’t lose much if the market does fall even more.
How can you minimize investment risks?
None of the experts can tell you where the market is heading next, If you don’t believe, just consider opening tradingview and you’ll find a lot of cryptocurrency experts showing different charts. One analysis would say that the coin would rise by 30% and the other would say that it might fall by more than 50% and some would say that the price would remain the same.
It means that no one knows where the market is heading, but everyone is trying to make some meaningful information from the pattern, information and other data they have. Don’t trust any of those graphs, think only one thing. Do you believe in bitcoin? Do you think it would come up someday? And are you willing to take the risk if it falls down? If the answer to the three questions I’ve asked before this sentence is a “YES” then you should consider investing into it or holding it.
However, a key way to minimize your loss would be, diversification. Find out different investment opportunities, invest your money equally or the projects which look more favorable, matches your risk taking abilities and invest into them. That’s the only way you’ll be able to minimize losses, if at all they happen.