This post was originally published on Smart Bitcoin Buyer.
If you have even a passing interest in crypto, you’re probably aware of the crazy swings the market has undergone recently.
After the prices of many coins reached extreme high points at the start of 2022, they’ve since plummeted to severe lows, leaving many wondering what would come next.
Now things appear to be calming, you might be wondering if it’s a good time to start investing in cryptocurrency. Let’s take a look.
The Crypto Market: A Quick Recap
Everything moves fast in the cryptocurrency world, so if you haven’t checked the latest market news for a week or so, chances are that you’re already behind.
Late 2021 was a boom time for most major cryptocurrencies. For instance, bitcoin surpassed the $67,000 mark to reach an all-time high around this period.
However, by mid-January, the seemingly inevitable fall came; the price tanked to around $35,517 at its lowest. Most other coins followed a similar pattern (the cryptocurrency market tends to follow bitcoin’s movements).
Although crypto has always been notoriously volatile, there have recently been a lot of concerns regarding regulations. China banned cryptocurrencies, and other countries are making moves to introduce more controls.
Yet at the same time, the buzz around the metaverse and NFTs has kept crypto firmly in the news, helping it move toward the mainstream.
Despite the falls over the last few months, things have begun to look up recently. Sticking to the case of bitcoin, the coin has almost continuously risen in value over the last two weeks, leading many to believe a full recovery could be on the way.
Still, there’s a long way to go until the market returns to its previous highs. Bitcoin has been hovering between the $40k and $50k price range, where it was approaching $70k a few months ago.
Time to Consider Investing in Cryptocurrency?
We now come to the ultimate question: Is now the time to start investing in cryptocurrency? Maybe, just maybe.
In the investing world, the name of the game is to buy low and sell high (assuming you want to make a profit). The problem is that there’s no way of predicting what the ultimate low or high will be.
However, we do know that recoveries have always followed dips for major cryptocurrencies like bitcoin and ethereum.
Considering that we seem to be coming out of a dip now but we’re still a long way from the all-time highs of most cryptocurrencies, it seems like a promising investment.
Ultimately, the question comes down to how you feel about risk. If you’re the type of person who would freak out after seeing that your investment declined, there’ll never be a perfect time to invest in crypto. But if you’re prepared for short-term pain to achieve long-term gain, now is looking like a pretty good time to get involved.
Top Cryptocurrencies for 2022
So far, we’ve focused on bitcoin, but there’s more to the cryptocurrency world than the original crypto giant.
We recommend spending some time reading sites containing crypto news and analysis (such as Coindesk) to identify hidden gems in the market yourself. If you find a coin that sounds interesting, research its price history and key features before you invest.
However, if you’re looking for a place to start, here are a couple of cryptocurrencies that seem to have promising futures.
Ethereum is the second-biggest cryptocurrency thanks to its ability to execute smart contracts, which are the basis of exciting technologies like NFTs and crypto gaming.
Unfortunately, it’s recently been highlighted that Ethereum is inefficient and not scalable, which lays the way for alternatives to take hold. Solana is one of them.
After marketing itself as a faster and better version of Ethereum, Solana is now the eighth-biggest cryptocurrency, and its price has jumped in value from around $26 in July 2021 to more than $230 in November 2021 — quite the turnaround. Although it’s now closer to the $100 mark, things seem to be recovering.
But Solana isn’t the only crypto protocol positioning itself as an Ethereum alternative. Polkadot has been another success story over the last year or so. Its main selling point is joining different blockchains together, which opens up more possibilities for app developers than something like Ethereum can offer.
Since its launch in 2020, Polkadot has enjoyed two separate price spikes — reaching $47 in May 2021 and $54 in November 2021. At the time of writing, the price is now around $22 but it’s been headed in the upward direction. Now could be the perfect time to profit from the next high point.
How to Invest in Cryptocurrency
Even if you know which cryptocurrencies you want to invest in, getting stuck in can be a daunting process.
People talk about “investing in cryptocurrency” all the time, but they rarely go into the details of how exactly to go about it. For a beginner, crypto investment is a lot to navigate — it involves more steps than investing in something like a stock since you’ll need to convert your currency over to crypto and figure out where you want to store your funds.
We could go into great detail about the complexities of every single step, but here’s the gist of things:
- Choose an exchange. Buy your chosen cryptocurrency from a dedicated exchange like Binance or Coinbase. Make sure you look at the fees of each platform carefully since costs can eat into profits, and ensure an exchange actually sells the crypto you want to buy.
- Buy your cryptocurrency. Use your debit or credit card to purchase your crypto of choice. Be careful here, because some banks don’t allow transactions on certain exchanges due to security concerns regarding crypto.
- Move your crypto to a wallet. It’s more secure to store your crypto on an external wallet rather than leaving it sitting in an exchange. There are a few options here, including online storage options like MetaMask and offline wallets like Exodus. Do your research, especially when it comes to security and insurance policies.
- Choose a strategy and stick to it. Many crypto investors like to HODL, which means they buy a cryptocurrency and hold it over the long term. Others follow trading strategies to try and play the market. Decide what your approach will be, and stick to it.
It’s Over to You – Time to Start Investing in Cryptocurrency?
It’s impossible to find the perfect time to invest in cryptocurrency — and the longer you spend reading news and predictions, the more you’ll realize that there’s always someone saying that a crash is imminent and another person saying that prices are about to go to the moon. At the end of the day, you have to decide for yourself and prepare to be wrong.
Disclosure: The author is not a licensed or registered investment adviser or broker/dealer. They are not providing you with individual investment advice. Please consult with a licensed investment professional before you invest your money.
Learn how to diversify and hedge your long-only stock portfolio. Sign up for a free insight into the Swing Trading 101 program developed over thousands of hours of trading over hundreds of thousands of dollars across stock, commodities, options, and cryptocurrencies. It’s designed to empower you to take a unique but strategic approach to the markets. Learn More.
Tim Thomas has no positions in the stocks, ETFs, mutual funds, forex, cryptocurrencies, or commodities mentioned.
Featured image credit: Unsplash.