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The Crypto Boom of 2017 catapulted Bitcoin into the front and center of the world’s lexicon. In a flash, the whole world knew about crypto and everyone wanted some. Trading cryptocurrency changed the lives of thousands, and the extremely high market value legitimized cryptocurrency as the new economic frontier.
If you didn’t already know: The Crypto Bubble has long been burst. In 2022 Crypto took a huge fall in the market, and the buzz around crypto’s potential has fizzled tenfold.
Does this mean that crypto is dead? We don’t think so. Insider Intelligence reports that 3.6 million Americans will use crypto currency to make a purchase this year, that’s an increase of 68.6% from last year. Crypto is far from dead. Instead of throwing away the crypto dream, we need to rethink our relationship to crypto as it changes within the market.
Here is our guide to adjusting how we think about crypto in our lives and in our investment portfolios.
Is Crypto Still A Good Investment?
Cryptocurrency is extremely volatile, and it should always be considered a high-risk investment. If you can accept the high risk, then cryptocurrency can still be a good investment type for you.
However, because of crypto’s volatile nature, we recommend that your crypto investments do not exceed 5% of your investment profile.
Meme Coins
Meme coins were popularized during the Crypto Boom to be a fun alternative to traditional coins like Bitcoin or Ethereum. It was fun and cute at the time, and people were paying good money to get their hands on popular meme coin. Needless to say, the charm of meme coins did not last.
Are people even still doing this? If you’re still coveting Doge Coin or anything of the sort, it’s time to read the room. The crypto dream is still alive, but the meme coin bit is undeniably dead.
If you’re thinking about investing your meme coin in 2022, it may be to turn your phone off and touch some grass.
Cryptocurrency as A Short-Term Investment
During the Crypto Boom, people were trading their coin at a rapid pace. Prices were sharply rising and dropping by the day, and there were tons of new traders ready to get in on the action. Because crypto had the world’s attention, the market was perfectly suited for short term trading. That is, there was almost always a buyer ready for the trade, which made the monetary value of crypto currency much more tangible.
Should you still be trading your coin on a short-term basis? We don’t think it’s for the best. You’re bound to lose out on your investment given the current state of the crypto market.
Short term coin trading is still possible if you can handle the risk, but it’s nothing like it once was during the boom. You may run into issues selling your coin because there aren’t enough people looking to buy. Trading is possible in theory, but you can run into some seriously roadblocks in practice.
Short term crypto trading has effectively gone out of style, and the get rich quick of crypto mentality should be phased out as well.
Cryptocurrency as A Long-Term Investment
Now cryptocurrency is trying find its footing as an established market, and right now, holding your crypto investments long term may be the best way to ride it out. Of course, the risk still applies to long term investments, but keeping your coin for years may be the new. Normal for crypto trading.
If you still have crypto that you aren’t quite sure what to do with, consider keeping it and waiting. Several economists have predicted for Bitcoin to rise to $100,000 again, and you’ll want that investment in your pocket when the time comes around.
Again, your cryptocurrency investments shouldn’t exceed 5% of your portfolio. If you keep it. To a minimum, your portfolio should be able to handle the volatile nature of the crypto market.
The Bottom Line
- Crypto is always a high-risk investment
- Don’t let your crypto investments exceed 5% of your portfolio
- We can’t treat crypto like we did during the Crypto Boom
- Consider crypto a long-term investment