- May 2, 2018
- Posted by: Pro
- Category: Uncategorized
We are frequently asked by cryptocurrency beginners and expert investors alike if they should be investing in Bitcoin at the current time. But the answer is never a simple yes or no when it comes to Bitcoin investing. So we asked our expert crypto traders, who have years of experience and a plethora of crypto trading secrets for some insights. What we heard again and again is that there are a lot of variables to account for, and the answer is never black and white. Instead, we boiled down those expert observations into these 5 questions that will help guide you towards understanding if Bitcoin investment is right for you.
#1: Am I willing to lose what I put in?
November and December of 2017 saw many, especially those with little knowledge of Blockchain and cryptocurrency, take out mortgages or risk their life savings in order to participate in what they were told was a surefire hit. The massive fluctuations in BTC price over the following months caused many people to lose much of what they put in. That is why it is crucial to ask yourself: Am I willing to lose what I put in? If you are not, there are ways of better managing crypto’s ups and downs…
#2: Am I willing to use external tools to better guarantee returns?
That leads us well into the second question that you need to ask yourself. External tools, especially those utilizing machine learning and Artificial Intelligence, will always be able to predict market trends and post better returns than humans will. Investing in these external tools will take a lot of the risk out of investing in a volatile market like crypto.
Humans tend to struggle with seeing the bigger picture, such as understanding sunk-cost fallacy or analyzing and recognizing trends as they are taking place. These issues are significantly limited when aided by an external tool. You may spend more money to use these external tools, but the returns become larger and the risk is greatly minimized. Free tools do exist, but some are designed for highly experienced traders and do not have built in risk management, so choose your tools well.
#3: Am I willing to invest in other cryptocurrencies?
Bitcoin has always been a fantastic investment opportunity, but the vast cryptocurrency space opens up the possibility to diversify assets with more ease and fewer risks than more traditional investment opportunities. This diversification allows investors’ portfolios to be more consistently positive than if they solely invested in Bitcoin. While diversification is a very positive move, knowing which cryptocurrencies to invest in and when is difficult, even for those who day trade cryptocurrencies for a living. This is another point where external tools show their true value.
For example, which coins are liquid? Why is Ripple so hyped? Analyzing the incredible amount of data at hand and recognizing the trends that emerge allows these tools to make clear and concrete recommendations that will always be superior to the guesswork that investors are left to if they do not have these tools.
#4: Am I willing to devote a large amount of time?
Analyzing trends, reading articles, gaining a good technical understanding of cryptocurrency, mulling through tweets from experts, and keeping very close tabs on the smallest changes to Bitcoin’s price are all crucial to being a successful Bitcoin investor. Unfortunately, all of that takes quite a bit of time, and that is something that not everyone is willing to commit to.
The cryptocurrency world moves quickly, and you must too if you wish to invest in it. There’s a lot of fluctuating information to base decisions on, so taking only some of this information on board will hinder your ability to make the right investment decision at the right time. This too can be helped massively with the aid of tools that do much of this work for you.
#5: Should I invest in cryptocurrencies or stocks?
Cryptocurrencies are an amazing investment opportunity, but they may not be right for everyone. With a lack of time, knowledge, or external tools to aide investment, the incredible returns posted by cryptocurrency investors may be out of reach. Stocks, on the other hand, require less commitment and are a safer investment for those willing to take risks. Remember, however, that a 5-10% return in stocks is considered good, while investing in Bitcoin in just the last 12 months would have seen an investor make a 145% return (prices as of writing).
“Bitcoins are like gold bars with wings. That is why I, and so many others, view bitcoin and its network as gold 2.0.”
– Tyler Winklevoss, Founder of Winklevoss Capital Management
If you are willing to put in the proper time and effort required, the potential returns found in crypto speak for themselves. If you are not, stock trading, which already has long established understanding, could be right for you. Our experienced team, however, strongly recommends investing in external tools and sticking with crypto, as using these tools lowers risk while maintaining crypto investing’s ability to be the most lucrative opportunity around. CCN agrees, and is very excited for the launch of RoninAi:
“Right now the only trading tool that seems to analyze and interpret both technical, crypto specific, and social data is RoninAi whose saas platform is launching this summer.”
While both stocks and crypto have a steep learning curve, stocks are more institutionalized and the tools that exist for it are purposely difficult for beginners to use. If you are going to choose to invest in crypto, avoid tools which are based on stock methodologies and find those that have risk management built in and are not based on opinions.
Related Article: Should I Buy Ethereum? 4 Reasons Why It’s a Smart Investment