Menu

Investing in Cryptocurrencies – A Wise Decision in 2021?

Investing in cryptocurrencies is a hot topic in 2021. There are some people who swear it’s the best decision they ever made, and there are some that are more sceptical and worried about the potential to lose money.

You may wish you had invested in cryptocurrency or crypto etfs in the early stages of the past decade when the bitcoin price was a lot lower. If you decided to invest in cryptocurrency back then, by now you might be rich like Charles Schwab and never have to work again. But it’s not too late to discover the best investment for your financial goals.

This article will take a look at both sides of the coin – no pun intended – to help you decide if you want to invest to help you on your path to financial freedom. It will also talk about what qualities one should have as a crypto investor and go over a few investment facts those people interested in blockchain technology, crypto prices, and cryptocurrency investing should know before entering the market and purchasing some crypto assets with your fiat currencies.

Pros and Cons of Investing in Crypto – 2021

Investing for the future in Bitcoin, Ethereum, Bitcoin Cash. Binance Coin or other digital currencies could potentially have a lot of upsides that investing through fiat banks and investment firms cannot offer. The potential to make huge returns is always alluring, and with bitcoin’s price and other cryptocurrencies offering much higher ROI than traditional investments in 2021, it may be the perfect time to buy crypto and start trading.

There are potential downsides, however, that need to be carefully considered before investing. Some crypto efts (exchange-traded funds) for example, are not always a good investment, they can be risky and take you further away from your financial goals.

This table shows a few of the most notable pros and cons of investing and trading cryptocurrencies in 2021.

Pros
  • It’s easy – Since prices have exploded in popularity since 2019, there are lots of cryptocurrency exchanges like Robinhood or Binance that make it very easy to invest
  • It’s safe – There is less chance of identity fraud since you don’t need to reveal any personal information to access the markets
  • Minimal fee.
  • Casino play – Gamblers who buy stock using any of the various coins accepted, unlock the possibility of playing at special casinos, which offer many benefits traditional online casinos do not
  • High earning potential – Historically, blockchain based currencies have the capability to make huge gains in value even over a short period of time
  • Lower fees – Transaction fees are tiny compared to those at traditional financial organizations like banks or the stock market
Cons
  • Investment scams – The blockchain is not regulated like a bank’s ecosystem. There are shady cryptocurrency firms that take advantage of that fact and try to steal investors’ money
  • Cyber hacks – There have been hacks in the past, so investors need to make sure they have a safe place to store their wealth
  • Do it yourself – There are no customer service reps for the blockchain like with a bank, so you’ll have to go through the (very simple) investment process yourself
  • It can be nerve-wrecking – The waiting period between sending off your money and the crypto being credited to your exchange account is scary for newbies
  • It’s not as liquid as fiat – If you need to spend the money at places that do not accept Bitcoin or other alt coins, it’s a bit harder to cash out

Luckily, most of the downsides of crypto investment are due to the fact that blockchain technology is still fairly new. As the numerous coins continue to grow in popularity, more transactions occur, and the market cap of the crypto space increases (with the help of smart contracts, non-fungible tokens, a rise in real-world uses by big banks and other financial institutions, etc.) the investment will become even safer and easier.

What Type of Person Should Invest in Crypto?

bitcoin invest

Investing in crypto is a high-risk high-reward game, and not everyone in the world is cut out for it. The good news is that gamblers tend to make great crypto investors because the two activities involve a lot of the same skills. A few of the main ones are:

You Have High-Risk Tolerance

Cryptocurrency trading is much more volatile than stock trading. Digital dollars tend to go up or down in value very quickly, sometimes more than 10% per day. This is an uncomfortable prospect for people of the world who are risk-averse.

High risk also means high return, though. If you’re fine with taking on risks, then cryptocurrency swings in value are not much of an issue to you.

As an investor, The greatest priority for you should be finding a cryptocurrency that has the potential for high earnings and the potential losses you’re willing to accept.

You Like Research

Before investing in cryptocurrency, you need to look into your options and find coins that look promising. That might mean investigating the team behind different cryptocurrencies, upcoming events for those currencies and their framework, and historical cryptocurrency market trends including information on past performance and volatility to give a better idea of future potential.

You Like to Form Strategies

blockchain

Once you buy digital currencies, you should not just stop paying attention and wait for your investment portfolio to appreciate in value. Rather, you should research and adopt a cryptocurrency investment strategy to decide when to cash out, when to stake, and when to hedge.

You Are Patient

Crypto investors need to understand that they will sometimes need to endure storms before their investments pay off. If an investor gets spooked and sells their coins the moment they drop in value, they will almost certainly not be successful.

Cryptocurrencies’ potential profits go hand in hand with their volatility.  They will, without a doubt, become the norm for business transactions in the future.

For now, investors must be patient and wait for the right time to execute transactions. 

You Have a Decent Amount of Savings

One mistake some rookie crypto investors make is overestimating how much to put towards their digital assets. Because of how volatile the digital currencies market is, no one should be investing more than 20% of their net worth in the crypto market.

What You Need to Know About Investing in Cryptocurrency in 2021

If one is to invest in cryptocurrency, it is important they know what they’re getting into. So let’s bust a few myths and misconceptions many people have about taking the leap into the crypto-verse.

There are Many Cryptocurrencies using Blockchain Technology

crypto coins

Bitcoin is the largest cryptocurrency and gets almost all of the attention in pop culture. It has the highest market cap of any coin, but this is only part of what makes it one of the most desirable crypto assets. There are actually over 10,000 coins on the market, many of which are suitable for cryptocurrency investments.

Finding the best ones for your style requires some research, but there are sure to be ones that are perfect for you.

For example, risk-averse crypto investors may want to use some of their portfolio funds to buy cryptocurrency Tether (USDT), a coin that is closely tied to the value of USD. USDT is not the only USD coin but is currently the dominant cryptocurrency used for this purpose.

It’s Easier Than It Sounds

Many people believe cryptocurrency analysis is a highly technical endeavor that is just too complex for anyone other than financial institutions and techies. This may have been true in 2010, but nowadays crypto portfolio is quite easy thanks to intuitive exchanges like Coinbase and Kraken. The exchanges allow you to purchase crypto with a normal credit card and make it simple to transfer to a wallet.

Many businesses now accept, hold and buy cryptocurrencies for transactions as well as using tokens like crypto efts, which use the blockchain and cryptocurrency network to offer access. When looking at the entire commercial landscape, it is only a small percentage of businesses doing this thus far, but numbers are growing by the day.

It Requires Research of Market Data

The principles behind most cryptocurrencies and all other forms of financial products are usually  pretty complex, and it will take most people many hours of research to understand them. Just like with the stockmarket, investors should not put money in digital assets without any understanding of how blockchain technologies work.

Throwing money at your cryptocurrencies or any financial products without any research is like throwing darts at a board blindfolded – you’re likely to end up on the losing side.

There’s A Community

social media

Beginner crypto investors do not have to go at it alone; there are tons of social groups for new investors out there. In these groups, investors can discuss and learn about strategies and other ins and outs of the market to improve a portfolio. A quick search on Facebook or Twitter will probably show you some online groups. For in-person meetups, social gathering platforms like Meetup.com are a goldmine for crypto-related networking events.

Bitcoin Halving

The bitcoin halving is an event that happens every four years and has historically been the single biggest driver of prices across the digital money market. During the halving, the yield for mining bitcoin is halved. This affects the price of bitcoin, and all other coins generally follow a similar price trajectory. Since the last halving was in May 2020, historical data suggests the market is in for an explosive rise in late 2021.

Crypto Assets – Investment Facts

If you’re still on the fence about whether or not to put some savings into cryptocurrency, take a look at some of these facts and they may help you decide.

Crypto can’t be banned

Despite what you may have heard. Individual countries may express disapproval of the concept, but it is physically impossible for them to stop their citizens from trading crypto as long as they have an internet connection.

The first crypto transaction

It was back in 2010 when an American man traded away 10,000 bitcoin in exchange for two Papa John’s pizzas. They were worth $40 at the time, but they’re now worth $640 million.

If you had invested $1000 in Bitcoin

Back in April 2016, it would be worth roughly $150,000 as of April 2021. Even if you had invested $1000 in April 2020, it would be worth $10,500.

There are over 10,000 cryptocurrencies

They each have their own pros and cons that investors should research before buying.

Noteworthy Crypto Investment & Market Cap

There are a few crypto investment opportunities that stand out from the crowd. They are as follows:

Bitcoin

Despite the sea of new digital currencies that have altered the market, however, bitcoin (BTC) remains the most popular digital currency by a long shot. Many investors considered bitcoin the original cryptocurrency.

Bitcoin’s price today is $51,618.86 and the market capitalization is $972,403,174,469

Binance Coin

Binance Coin (BNB) is the native cryptocurrency of the Binance blockchain and Binance Smart blockchain, which was launched as an Ethereum token in 2017 but migrated to its own network in 2019.

Binance’s price today is $436.09 and the market cap is $73,324,600,124

Ethereum

Ethereum is a decentralized open-source blockchain system, also known as the Ethereum network, which has its own cryptocurrency, Ether. ETH serves as a platform for various other cryptocurrencies, as well as the execution of decentralized smart contracts. Vitalik Buterin first introduced Ethereum in a 2013 whitepaper.

Ethereum’s price today is $3,493.24 and the market cap is $411,625,130,083.

Grayscale Bitcoin Trust

Grayscale Bitcoin Investment Trust(GBTC ) was one of the first vehicles to offer Bitcoin exposure to investors, but note that this fund is an OTC ETN, not a Crypto ETF.  

An easy way to put Bitcoin in your portfolio from a single ticker symbol: GBTC, just as you would with other investment products.

GBTC’s price today is $40.44 per share with a market cap of $27.09 Billion.

Crypto ETFs

Crypto ETF is a type of exchange-traded fund that gives traditional investors more comfort. Traditional investors may now have cryptocurrency exposure in their portfolios without having to be coin custodians.

An ETF doesn’t have be only in Bitcoin; these funds can include a basket of different blockchain projects, allowing investors to put their money into an expertly managed portfolio of cryptocurrencies. Allowing them to spend without having much knowledge of trends themselves and reduce the danger from the volatility of cryptocurrency.

Best Crypto to Invest in 2021

If you do want to invest in digital currency, you should research cryptocurrencies to see which ones you like the best and how much money to invest in each. That being said, here are 10 of the most promising cryptos to invest in during 2021 accompanied by some historical data for each coin.

Coin

Peak Market Cap

Past Year Growth

Projected Growth in Next Year as Per walletinvestor.com

Bitcoin (BTC)

$1.2 trillion

307%

65%

Ethereum (ETH)

$473 billion

713%

76%

Ripple (XRP)

$118 billion

391%

64%

Binance Coin (BNB)

$104 billion

2,090%

69%

Cardano (ADA)

$94 billion

2,209%

87%

Dogecoin (DOGE)

$89 billion

86,566%

111%

Polkadot (DOT)

$45 billion

324%

116%

Litecoin (LTC)

$26 billion

192%

49%

Chainlink (LINK)

$22 billion

67%

96%

 

The coins with a higher growth rate during the past year are generally less stable because they just recently emerged as major altcoins. However, those coins usually offer higher potential rewards. Gamblers especially might find them fun investments.

So, is investing in crypto a good idea in 2021? It’s up to individual preference, but gamblers generally make great cryptocurrency investors and should get started creating an investment portfolio as soon as possible. Not only is it a great way to make profits, but it also allows gamblers to play at crypto casinos.