What You Need To Know Before Buying Crypto in 2022
Cryptocurrencies are still a relatively new way of investing for most people. If you are thinking about investing in them, BigONE believes that 2022 is a good start point because investing in cryptocurrencies will give you the opportunity to secure significant financial benefits. But, before you purchase cryptocurrency for the first time, there are a few things to consider.
Assess your financial situation
Before you begin investing in cryptocurrencies, you allow for the possibility that you risk losing your entire investment. Cryptocurrencies, like stocks, are volatile; this isn’t to say you’re guaranteed to lose your funds, but from the outset you should prioritize your financial situation and have emergency funds on hand to prevent any losses from disrupting your everyday life. Without reliable backup funding, you may be forced to sell some of your cryptocurrencies, missing out on gains from rising cryptocurrencies in the future.
Devote time and effort to research
Some cryptocurrencies you may already be familiar with are well-known due to celebrity or social media hype. As a result, prices may rise quickly but then fall as the hype subsides. Novice investors can be easily swayed by celebrity and media hype, when there is no underlying value or actual utility to the crypto asset.
Importantly, when you invest in a cryptocurrency, once a celebrity or the media starts talking about it, and the hype develops, the value of the cryptocurrency is unlikely to fall in the short term. However, BigONE recommends that you take the time to understand the cryptocurrency you are about to invest in to see if it has long-term investment potential. To summarize, it is necessary to devote time and energy to researching any investment before making a purchase.
Fully understand the risks of investing in cryptocurrencies.
There is no such thing as a risk-free investment, and even a bond that is thought to be safe can backfire and result in financial losses for investors. Cryptocurrencies, like stocks, are risky investments, but cryptocurrencies can be even more uncertain. Because the cryptocurrency market is more volatile than the stock market, the value of your investment can fluctuate dramatically in a short period. Because of the nature of cryptocurrencies as an entirely new asset class, even the most well-established cryptocurrencies, such as Bitcoin and Ethereum, are potentially subject to wild price swings. When you invest in cryptocurrencies, you cannot expect your investment to be stable, just like investing in stocks. You should be aware that large price fluctuations may occur in the short term; so, if you want to become a cryptocurrency investor, you should always be prepared for market fluctuations and other risks.
BigONE recommends not investing in funds that exceed your risk tolerance to better cope with the losses caused by market fluctuations. At the same time, you must keep a level head; don’t panic sell when the price is falling, and don’t rush to buy when the price is rising. What you need to do is keep a cool head and keep investing rationally, even if the asset’s value rises or falls significantly.
Furthermore, new regulations may make cryptocurrencies less appealing to investors due to upcoming regulatory policies. This will potentially impact your investment returns and result in less demand for the cryptocurrency, eroding its value. This is not to say that you should avoid buying cryptocurrencies because of these risks; instead, make sure you understand them thoroughly before entering the cryptocurrency space.
Get a clear picture of every cryptocurrency you’re investing in
Before purchasing any cryptocurrency, you should thoroughly understand its fundamentals, such as who created it and why, what cutting-edge technology it employs, why investors will back it, and so on. BigONE believes that if you don’t understand how cryptocurrencies work and their role in your investment portfolio, you shouldn’t buy blindly. It’s also worth considering along with the technology, the strength of the crypto community which is supporting it. As BigONE Chairman Anndy Lian tweeted on January 18, “Projects with big communities should drive commercialisation not speculation.”
This year is expected to see the rise of the metaverse, NFTs, and DAOs, and it will be an excellent place to begin investing in cryptocurrencies. Just this week it’s been announced that
Microsoft is to buy Call of Duty maker Activision Blizzard for nearly $70 billion, in a move to enter the metaverse gaming sector building on its Xbox brand.
Some people buy cryptocurrencies intending to sell them for a quick profit, acting as traders. Others acting as investors purchase cryptocurrencies with a longer-term goal in mind, hoping to profit from long-term investment. As a result, before investing in cryptocurrencies, it is critical to select an investment strategy that is appropriate for you. BigONE believes that purchasing cryptocurrencies may be one of your wisest investment moves in 2022, and that following our advice will go a long way toward getting you started on a sound approach to cryptocurrencies.