The crypto price crash is sending a lot of investors into a frenzy, and rightfully so. Their investments have fallen into record lows after last year's record-highs, which is what cryptocurrencies do on a regular basis anyway.
But even with the price crash, is it still advisable to invest in digital currencies? Here's what you should know.
The Price Swings Are Part Of It
In a CNBC report, various experts agreed: if you want to invest in crypto, you need to be comfortable with the wild price swings. This is all due to the volatility of digital currencies as a whole, which is something that all crypto investors should accept.
According to certified financial planner Anjali Jariwala, these wild price swings will almost always mean you'll lose money as quickly as you earn it (via CNBC Make It). If you go into the market fully expecting that you'll lose as little money as possible, you'll be in for a heap of disappointment.
The risk tolerance levels vary from investor to investor--people should be aware of that. So maybe you should ask yourself if you are comfortable with the price swings, especially if you're looking to do this in the long run.
However, you should also be careful about how much money you want to allocate to your investment, says financial planner Douglas Boneparth (via CNBC Make It). For instance, putting as much as 80% of your wealth in something like Bitcoin can be devastating, especially when the cryptocurrency's price drops to as little as 30%.
A great example of this would be NFL star Odell Beckham Jr., who reportedly lost "a ton" of his playing salary after announcing he will take his entire season's pay in Bitcoin. But while this decision doesn't put him in the poor house by any means, his experience should still be a bit of a cautionary tale.
Read also: Five Cryptocurrencies That Redditors Want to Invest in 2022 | From Solana to Binance Coin
What Does The Crypto Price Crash Tell About The Future?
Don't panic, even if the crypto price crash seems really bad. Take stock, assess the events, and see what the future holds for your investment, according to BankRate.
Staying updated with current events in the crypto space can be incredibly helpful. For one, you'll need to be aware of which countries are staunchly against the use and trade of cryptocurrencies as a whole, such as China, Russia, or India. If you live in those countries, maybe it would be wise to move to a country where rules on digital currencies are far more relaxed so that you can protect your investment.
Also, always remember that as long as crypto gains traction, it could fall victim to its own success. In simpler terms: the more people use it, the more it becomes a target for tougher regulation, which could once again affect it due to its volatile nature.
Breaking Into The Market
Once again, on the subject of volatility, maybe the recent crypto price crash presents a good opportunity to those who want to try investing in it. Now that it is cheap, it could be a great idea to buy some. But when exactly is the "perfect" time?
Quite simply, there's no "perfect" time. But The Motley Fool offers this advice: never put more into a crypto asset than you're willing to lose. Also, do as much research as you can into market trends to identify specific patterns.
For the most straightforward answer, buying crypto assets when low prices is the most obvious option. Given how wild the price swings are, that stash you just bought could go from a few hundred to as much as hundreds of millions in value practically overnight. But swings like these are few and far between, so you'll need to be vigilant about them.
Or maybe you could learn how to invest in cryptocurrency without actually buying any. The choice is yours.
This article is owned by Tech Times
Written by RJ Pierce
