It is hard to give a specific time as the right time to invest in any business. However, successful businessman and one-time world’s wealthiest person, Warren Buffet, says “the best time to invest was yesterday, the second-best time is today.”
Warren Buffet has invested in several successful businesses so he is in a fine position to talk about when best to invest but when it comes to cryptocurrency – one of the most volatile investment trains – even Buffet’s advice becomes hard to follow. Or is it? Before discussing the best time to invest in cryptocurrency, here are a few tips to help you get started.
Invest in the right cryptocurrency
Not all cryptocurrencies are made the same; some are poised to crash easily while others have the potential to last for an extensive period of time. Up until 2016, Bitcoin was the only cryptocurrency available, and it still holds the largest market cap in the crypto-market. Other digital coins available include; ripple, ethereum, litecoin, monero, dash. You must invest in the right cryptocurrency; putting your dollar into the right cryptocurrency could be like buying Apple or Amazon shares in their early days.
So, how does one know the right cryptocurrency to invest in? You do so by educating yourself about the different cryptocurrencies around. There are sites to help you become familiar with the cryptocurrency industry and learn how to trade and invest. Alternatively, you can get an expert on cryptocurrency to coach you. Also, it is important to understand that investing in cryptocurrency is not the same as investing in stock or a company, it is more like buying a currency with high value compared to the dollar.
Different ways you can invest in cryptocurrency
Cryptocurrency is not a company neither is it a stock, it is a digital currency. It is crucial to understand this before you contemplate investing in Bitcoin and any of its siblings. There are several ways to invest in digital currencies but these three are the most common, they include: cryptocurrency mining, cryptocurrency trading, and investing in crypto companies.
The cryptocurrency mining industry grew at an exponential rate and it is still growing, albeit at a sluggish rate now. Although, it is an expensive form of crypto-investment (it costs millions of dollars to have a data center filled with specialized computers built for mining digital coins); mining Bitcoins, for instance, could profit in the long term. Although, you could mine at home on a small scale to avoid the heavy cost.
Mining digital coins used to be a highly profitable investment but with more people joining, it has become a costly investment with little ROI. However, considering that the future seems bright for cryptocurrencies, mining could be profitable in the long run.
Crypto trading is perfect for those who want to cash in on the ups and downs of Bitcoin, Ethereum, Litecoin etc within a short period of time, say a year. This is the most common investment idea in cryptocurrency. Bitcoin, for instance, is known to start the year with a low value and increase astronomically towards December.
In March 2013, Bitcoin was worth around $40, by December 2013, it was well over $1000. The same thing happened in 2017; Bitcoin sold for $985 dollars in January, as at December 19, the digital coin was worth a massive $19,343.
There is a lot of money to be made from trading bitcoin and other digital currencies within a short period of time, it is all about understanding the dynamics of the crypto-market. You buy when there is a dip and sell when coins’ worth is high. You can buy Bitcoin and other digital coins on Binance or Coinbase.
Investing in crypto-companies
You have heard it before: Blockchain technology has the potential to change how we use money forever, blockchain is the future, digital coins will decentralize the financial market, blockchain will engineer the fourth industrial revolution etc. What these predictions point to is: Blockchain is indeed the future.
It might not happen now, but one day, the blockchain technology will be an integral part of our lives and that’s why big banks are investing heavily in it. They do not want to be left out; instead, they want to have a say in the movement from traditional banking to blockchain technology in the financial market. Banks rule the financial world and if they view blockchain so crucial that they are investing so much into it, it will be foolish for you to not do the same.
The Best Time to Invest in Cryptocurrency
First, it depends on your investment goals. If you are looking at the long-term benefits of investing in Cryptocurrency then Buffet’s advice is awesome, you must invest today! There are many who believe that, despite the fluctuation in the value of Bitcoins and other cryptocurrencies, Blockchain is the future. If you look at the growth of cryptocurrency in the last ten years, it is hard to dispute that, the digital currency market was worth a whopping 300 Billion dollars in December 2017.
For those, who want short-term benefits, now may not necessarily be the best time to invest in cryptocurrency especially in more established ones like Bitcoin and Ethereum. They are already expensive (bitcoin is currently trading at upwards of 6000 dollars); so, if you are expecting to invest some bucks and make some quick money with the hope that bitcoin will rise astronomically towards the end of the year like it did last December, then you will be playing a dangerous game of guess.
To succeed in this game of guess, you will need an excellent knowledge of the cryptocurrency market and some luck. For short-term crypto investors, it often comes down to luck.
Investing in cryptocurrency is all about understanding how they work, especially their volatility. The cryptocurrency market’s volatility makes it very irrational but if you know what you doing, you could make good money investing in it. Being a high-risk investment, it is advisable to only invest what you can afford to lose.