Should You Invest in Bitcoin and Other Cryptos Now or Wait?

Is Now the Perfect Time to Invest in Bitcoin and Other Cryptos?

As crypto markets show major movement in 2024, many of you may wonder if this is the beginning of the new bull market and whether it is an opportunity or time to invest in cryptocurrencies. Despite cryptocurrencies being relatively young, we can still draw insights from past cycles to assess the current condition and make more informed investment decisions. Let's consider whether it is a good time to invest in crypto.

Key Highlights

  • Despite these risks of speculation and volatility, cryptocurrency investments hold the potential for significant returns, which makes them attractive to investors who want substantial gains.

  • The historical four-year cycle of Bitcoin is often associated with halving events such as the current period. It is in the accumulation phase where the bull rally is anticipated.

  • Using different risk management strategies like dollar cost averaging and diversification again helps you reduce the volatility of crypto investment.

  • The recent regulatory developments, like the approval of the Bitcoin exchange-traded funds, show that cryptocurrencies are gaining acceptance into traditional financial systems, which would further drive the price of cryptocurrencies.

Does Cryptocurrency Belong to an Investment Portfolio?

Cryptocurrencies are highly speculative investments where people put their money in the hope that the price will rise rapidly. Such speculative assets, also called non-productive assets, don't generate income like interest, dividends or other earnings. Investors who buy speculative assets see profit in the short term. Since cryptocurrencies do not produce anything, their valuation is entirely speculative. You might also think the prices of cryptocurrencies will keep going up forever, similar to the stock market. But you must know that companies whose stocks are trading create a product or service that people use, unlike any other cryptocurrency. Even as a payment method, its uses are only limited. 

Now, to some good points about cryptocurrency, it is true that cryptocurrencies are highly speculative and highly volatile. Still, even if crypto is too risky, it is also too risky not to have some exposure to it. Crypto investment has the potential to give life-changing money most of the time. So, consider investing at least a small portion of your money in cryptocurrencies.

Is Now a Good Time to Invest in Bitcoin and Cryptocurrencies?

1- The Accumulation Period

The historical price of Bitcoin has indeed followed a four-year cycle, which is mainly associated with each Bitcoin halving event. We have witnessed a reliable pattern of rallies, pullbacks, and blow-off tops before these halving events. If we anticipate similar patterns, we can see another rally of an all-time high for Bitcoin after the upcoming halving, which is soon to occur in April 2024. There is an inflow of investments in crypto markets, and investors want to diversify and reinvest their profits. If we look at the history, the months before the Bitcoin halving events are an excellent time to invest in cryptocurrencies. 

2- The Regulatory Environment

Over the last few months, crypto investors have been convinced that the Security Exchange Commission would approve a year-long-awaited effort from the fund companies to bring spot Bitcoin exchange-traded funds to market. Recently, news broke that 11 new Bitcoin ETFs would begin trading, which made crypto investors go crazy and let the crypto market surge by 155% in 2023. So, is this the end of the bull phase in the crypto space? Definitely not, because a new wave of Bitcoin ETFs will make it easier for investors to go for crypto assets instead of opening a separate account to buy crypto. Investors will now invest in ETFs and hold cryptocurrencies and other investments with the same brokerage account. The move from the SEC will unlock more demand, giving retail investors cost-saving options and security. 

Suggested Articles: Top Ten Richest Cryptocurrency Traders in the World

How Do You Safely Invest in Cryptocurrencies?

The significant concerns behind crypto investments are they are highly volatile, and the safest way to invest in crypto is to reduce its volatility. One such strategy is dollar cost averaging, where you reduce the impact of volatility on large purchases of financial assets. In the dollar cost averaging strategy, investors, instead of trying to time the market, invest a fixed amount of money at regular intervals regardless of the price at which the asset is trading. This strategy lowers the average cost per share over time as the investor buys more shares when the prices are low and fewer shares when prices are high. This similar strategy can be used for buying cryptocurrencies that help in reducing volatility. 

Best Practices for Successful Crypto Investments

  • Risk Management 

Risk management is one of the effective strategies to protect your. You must understand your risk tolerance where you're willing to with the strength fluctuations in the value of your investment. Also, make sure your investment aligns with your risk profile. On the other hand, diversification also plays a vital role in spreading your investment across different assets like crypto stocks, bonds, etc. Remember, risk is an inherent part of investing in crypto and is not a one-size-fits-all approach.

  • Stay Updated

Continuously educate yourself about crypto investments and make informed decisions. You stay safe while investing in crypto and look for those common signs and red flags that seem wrong for your investment. Don't go for promises that look too good to be true. Scammers often pressure you to act quickly when they might claim the opportunity is limited; they are a red flag

Final Words

If you think you have missed the timing of investing in cryptocurrencies, as they are now trading near their all-time high, you must understand that time in the market is important, not timing the market. You can use different strategies like dollar cost averaging to enter the market anytime without risking your capital. This helps you reduce the volatility of crypto and enter the market whenever it is right. Moreover, if you are looking at whether it is a good time to invest in cryptocurrency, you must understand that as regulatory bodies are continuously evaluating the crypto space, they are making it easier for retail investors to stay safe. 

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Olivia Johnson 09 Mar, 2024


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