What you should keep in mind before investing in cryptocurrencies

With such a huge upside potential at general levels, few can resist the temptation to grab a slice of this pie as it’s no secret the cryptocurrency market’s valuation has grown to trillions of dollars in almost the blink of an eye. of eyes.

With a news market monopolized in a high percentage by news in the world of cryptocurrencies, investors giving their opinions and more and more people and institutions investing in this world, there is, however, no single answer as to whether digital currencies represent a good investment or no.

Opinions are divided. The most pessimistic believe that cryptocurrencies have no value because they are not backed by anything tangible and yet others consider the lack of authorities to be a key selling point.

One of the first things you should know when investing in cryptocurrencies is its volatile character. Unlike the stock market, where prices typically fluctuate a few percentage points each day, a cryptocurrency you can easily win or lose 20-30% of its value in just a few hours.

And it is that the prices of digital currencies are sometimes affected by economic growth or recession, as shown by the fall of the market in 2020 during the COVID-19 pandemic or any statement by someone relevant and generate great mistrust.

Despite this, the increase in the number of investors is palpable, although many of them previously opposed it, since they considered it absurd to invest.

For example, JPMorgan CEO Jamie Dimon said in 2017 that he would fire employees if they admitted to trading Bitcoin. Two years later, the company announced JPM Coin, a stablecoin that uses the same underlying technology as most cryptocurrencies.

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According to data collected by blockchain intelligence company Chainalysis, Global cryptocurrency usage has grown by at least 2,300% since 2019.

Now if you have just entered the cryptocurrency market, you may think that Bitcoin is overvalued or expensive at its current price. After all, there are thousands of other smaller cryptocurrencies They are trading at one or two digits.

If we use this coin as an example, you should know that the basis is not buying a unit of Bitcoin, but a fraction of that total (The smallest possible fraction in Bitcoin is 0.00000001 BTC).

On the other hand, if you have just entered this world, you can also consider that this currency or others like Ethereum have already reached their maximums and so to speak, it has nothing more to give. Well, this is not entirely the case and precisely in these currencies where there is less risk.

At the end of everything, alternative cryptocurrencies are not as proven or tested like the big names. Now, although the risk of losing part or all of the capital is much higher in small-cap tokens, you can also generate a large profit. Be that as it may, the investment is too risky.

If you have already decided to invest, there are many applications and websites that manage your capital, however, the most recommended are Binance, Coinbase, Kraken or Gemini.

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With all this on the table Is it safe to invest in cryptocurrencies?. The answer is that digital currencies are far from being the safest of investments. And depending on the tokens you decide to invest in, the risk can increase exponentially.

So don’t invest more money than you are willing to lose. Also, do not bet all your life savings if it is the first investment you make. The proper risk management is the hallmark of a good investor, And you always have to consider the worst possible scenario before committing to any investment.