Bitcoin is undoubtedly the most prominent cryptocurrency, accounting for almost half of the entire crypto market cap. It’s primarily the gateway to the crypto space that many people invest in to gain exposure to the virtual currency world. Bitcoin’s adoption has rapidly grown in recent years, attracting investors, businesses, and individuals worldwide.
However, Bitcoin is also a highly volatile asset, operating in an unregulated market. Such characteristics might make some investors skeptical about Bitcoin’s suitability as an investment instrument. So, how can one know whether Bitcoin is a suitable investment for them? The following article addresses that question, examining Bitcoin’s risk levels and expected returns.
Risk Assessment
Many people perceive crypto investments as hazardous endeavors. Thus, the rule of thumb is to invest what you can lose. However, the levels of risk usually tend to vary according to investors’ long-term investment goals.
Experts recommend Bitcoin ETFs as less risky investments, ideal for novice investors. ETFs invest in firms involved in blockchain innovation or futures and alternatives tied to Bitcoin’s performance. They let you invest in this cryptocurrency without owning the tokens, making them relatively less risky.
Bitcoin futures would be the most viable option for seasoned investors, allowing them to bet on the assets’ price. However, they may carry more risks than ETFs.
You could also invest in Bitcoin by buying the tokens directly through crypto platforms like this BitIQ App. Direct investments’ primary advantage is that they allow you to trade in digital assets. However, crypto trading is also high-risk and requires a strong understanding of unique strategies and the market.
If you want to invest in Bitcoin directly but tend to be more risk-averse, keeping long-term investments off the exchange platform on a hardware wallet would be the best option. That would limit your errors and cushion the investments from cyber threats such as hacking.
Buying Bitcoin might seem like a risky move. However, there are strategies for minimizing the risks. Foremost, you should find a reputable crypto trading platform in your country to buy Bitcoin. It is also critical to pay close attention to the crypto market news and events because the crypto prices grow and decline based on public perceptions. You should also acquire a secure Bitcoin wallet and observe the given security measures.
Expected Returns
Bitcoin has gained immense popularity as one of the most lucrative assets. However, there is no guarantee of the individual expected returns from direct or indirect crypto investments. Thus, every investor must remain realistic in their approach to crypto investing, accumulating growth gradually and cautiously.
Do not invest in credit or more than you can stomach. It is not unusual to see prices gain substantial momentum when the demand is strong. As such, a reasonable investment strategy would be to take out profits regularly.
Diversifying your Bitcoin portfolio would be an additional step to mitigate the risks and maximize potential returns when investing directly. Bitcoin boasts enormous use cases in more than 50 industries worldwide; hence, you can diversify by sector or geography. Adding Bitcoin to your portfolio is a great idea to diversify and protect the assets from inflation.
Bottom Line
Every healthy investment habit starts with understanding what you are putting your money on. So, take time to learn more about Bitcoin and the crypto market, knowing its unique benefits and risks for investors. Engaging a crypto specialist would also be a great idea towards understanding how Bitcoin investments work. You may also want to assess your individual investment goals to make sure that they align with Bitcoin. Nevertheless, the only way to know whether Bitcoin is a suitable investment for you is by taking the chance.
2022-01-13 15:06:47