Crypto is fast rising as an attractive investment asset class, pulling in both institutional and retail investors. In fact, dome of the big shot corporations have even started to convert their treasury capital into cryptocurrency these days. A recent survey has reported that a whopping volume of 46.5 million adults in the USA are contemplating on investing in crypto in 2023. As of 2022, among the 7.9 billion global population, 106 million people are using crypto. And, the number is fast increasing as well. So, if you have plans to buy bitcoin, well, you are not alone.
However, given the extreme volatile nature of crypto, and also because of the recent crash, many aspiring investors are having second thoughts on whether to buy bitcoin (or any other crypto) or not. Well, the post below offers a brief about the key reasons to put your money in crypto investment.
Reasons to invest in crypto
In 2012, Bitcoin was less than $120. Cut to 2021 December, Bitcoin was almost touching $60,000 just after its ATH that saw it surging to around $69,000.
One of the major aspects about crypto that attract investors is the possibility of dramatic returns. Crypto is wildly volatile and extreme volatility leads to high price swings in the market. Put simply, crypto brings in way higher returns in comparison to traditional investment vehicles such as stocks or bonds. You cannot expect conventional investment assets like bonds or stocks to surge up to as high as 60% in less than 7 days. But, such an astronomical surge is not impossible in crypto.
Diversification for investment portfolio
If you ask modern investors for investment advice, they would mostly suggest you to buy bitcoin or any other crypto for that matter. You might have investment in stocks or bonds but you should also consider investing in this emerging asset class. An ideal investment portfolio should be divided into diverse investment sectors. Diversification is the key to safe investment. If you invest in just one particular asset class, you might lose out on your entire investment if that asset takes a wild dip.
Smarter idea would be to diversify your investment capital in various investment assets so if one asset crashes down, other assets will be able to offer backup. Investment in crypto will serve as your backup investment in your overall investment portfolio. A major reason behind this is that crypto runs on its own terms and is not strongly affected by marketwide events. On the other hand, dollars or stocks usually get affected by marketwide events and changing regulations. Thus, crypto would make a safe diversification for your investment portfolio.
Besides, as mentioned above, crypto holds the potential for exceptional returns. So, if your buy bitcoin or any other crypto, you will not only have a highly profitable asset but also an investment vehicle that will serve as backup if other assets take a dip.
The rise or fall of the crypto asset class is largely determined by the demand of the asset in the market. Why does Bitcoin show an exponential growth today compared to what it was 10 years back? It’s because, over time, the adoption rate of BTC has only escalated to newer heights. More people are now interested in buying bitcoin and other crypto than what it was at least 3 years back. An increasing number of businesses have started accepting crypto payments today. As of 2022, over 15,000 businesses have started accepting crypto payments. From ordering a pizza to booking a flight, crypto payments are now common in almost every industry out there.
Such a growing rate of crypto adoption is only surging the overall value of the crypto asset class. So, if you buy bitcoin (or any other crypto) or invest in crypto now, you are likely to receive manifold returns after a few years.
Lower entry point
1 BTC is now trading at something around $20,000. Now, of course allotting a lump sum amount all at once could be quite a load for any investor, especially new ones. However, the good thing is, you can start your crypto investment on a low budget as well, say $1000. You don’t always need one whole BTC to invest in BTC. You can easily invest in just a fraction of the coin as well, which would cost you much less than investing in 1 BTC.
Besides, the crypto scene is bustling with several other cryptos and all of them cost less than BTC. You can easily find new low-priced altcoins that can bring you huge returns in the future. However, just make sure that the chosen new crypto is designed to ensure sustainable growth in future years.
Push for Regulation
While the extreme volatility of crypto enables it to bring dramatic returns, the same Wild West character can drown investors into colossal losses. And, this extreme instability is majorly caused by lack of regulation in the crypto sphere. In fact, this is a key reason why most of the aspiring investors are apprehensive of putting their hard-earned money into crypto- even when they are willing to. However, national governments, the IMF, and the fintech industry leaders all across the world have already started taking proactive steps to introduce regulation in the crypto space. The EU has already signed the MiCA declaration that has clearly outlined the rules to be followed by crypto-related businesses to ensure a legit operation. It is believed that a well-structured regulatory environment will protect the investors from wild instability and also crypto-related scams.
So, you have quite a list of reasons to motivate you to buy bitcoin or any other crypto for that matter. Now, the question comes- how much would you invest in crypto assets?
Well, crypto investment is not to fund your retirement savings or medical expenses in later years. Treat it as your extra money that you can utilize for some ultra-plush goals. So, don’t invest more than 5% of overall investment capital in the crypto scene. In fact, start with 2% and then move to 5%, if you feel comfortable.