Cryptocurrency has always been unpredictable, but it's been on a roller coaster ride in recent months. Cryptocurrencies have taken a drastic turn for the worst after shattering records and reaching staggeringly high values.
As of this writing, Bitcoin (CRYPTO:BTC), which hit a high of approximately $65,000 per token last month, has lost more than 30% of its value in the last ten days. Ethereum (CRYPTO:ETH) and Dogecoin (CRYPTO:DOGE), two other prominent cryptocurrencies, are both down roughly 30% over the same time period.
Market collapses can sometimes be advantageous to investors since they provide an opportunity to purchase equities at bargain rates. If you've been considering investing in cryptocurrencies but have been put off by their exorbitant costs, a crypto meltdown may make them more accessible. Is this, however, a reason to invest?
Consider your risk tolerance.
The most recent crypto meltdown serves as fresh evidence of the sector's turbulence. In the context of cryptocurrency's history, a 30% loss is quite minor. According to data from Visual Capitalist, Bitcoin has dropped by more than 80% on three separate occasions since 2012.
Bitcoin has already witnessed many significant declines this year. So this recent catastrophe is nothing out of the ordinary — and there will undoubtedly be many more in the future.
Consider whether you can tolerate this amount of risk before investing in cryptocurrencies. Although Bitcoin has always managed to recover from its downturns, there is no assurance that it will do so in the future.
Crypto may not be the greatest investment for you if you know you'll lose sleep if your investments drop overnight. However, if you can withstand this kind of turmoil, you could be the appropriate type of person to invest in cryptocurrency.
Carefully select your crypto.
If you decide to invest in cryptocurrencies, buying at a cheaper price may be a good idea. You can receive more for your money when buying during a downturn, especially if you're investing in a higher-priced currency like Bitcoin.
Before you invest, make sure you've done your homework. The fact that a cryptocurrency is less expensive doesn't indicate it's a good investment, so think about all of your options before buying. The idea is to buy long-term investments, so make sure you pick the correct cryptocurrency for you.
Bitcoin is not only the most well-known cryptocurrency, but it is also the oldest. This gives it an advantage over its competitors. However, it is a cryptocurrency that uses a lot of energy, which raises environmental issues. Tesla CEO Elon Musk recently announced that the company would no longer accept Bitcoin as a form of payment due to its negative impact on the environment.
Ether is the second-most popular cryptocurrency, and it runs on the Ethereum blockchain, which also powers non-fungible tokens (NFTs) and decentralised finance. The Ethereum blockchain has an advantage because it can be used for a variety of purposes.Furthermore, Ethereum 2.0 is now in development, which will be more energy-efficient and environmentally friendly.
Dogecoin is one of the most dangerous cryptocurrencies, and purchasing it is more akin to gambling than actual investing. If you do decide to go this path, make sure you do so wisely.
Invest only money you can afford to lose, regardless of which choice you choose. Even though it is currently more inexpensive, cryptocurrency remains a high-risk investment. While cryptocurrency isn't for everyone, if you do decide to invest, you can save money by doing it at a reduced price.
Is it worth it to put $1,000 into Ethereum right now?
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