The growing interest in cryptocurrency investments has opened up numerous opportunities for investors. These decentralized assets have the potential for high returns, but what makes them lucrative is the inflation hedge, innovation, and high accessibility.
However, many are still undecided whether crypto is as profitable, especially considering volatility. Indeed, all cryptocurrencies fluctuate in price depending on a series of factors, including supply and demand, but some assets, such as Bitcoin, have been relatively stable for some time. According to the latest BTC price prediction, its value is expected to continue rising as the supply shrinks due to the halving process, and demand for Bitcoin is projected to increase over the next five years. This will strengthen the coin’s market dominance and support its stable price movements.
Therefore, cryptocurrency is safe, but you must invest wisely and consider a series of key aspects. Let’s see how you can add it to your portfolio for the best results.
Know where to purchase crypto from
Choosing a reliable website or business to buy from is the first step towards safely owning crypto. Typically, users opt for a decentralized exchange that offers a wide range of crypto assets and operates based on certifications and authorizations. In the USA, the GENIUS Act provides guidance on consumer protection that issuers must follow. Based on insights from Binance.com Research, “The White House’s policy roadmap paves the way for regulatory clarity, enabling the convergence of Wall Street and Web3 through secure, scalable, and compliant infrastructure.”
Therefore, always use certified brokers or exchanges when buying crypto, regardless of the type of coin you’re looking for. Whether it’s an altcoin like Ethereum, a stablecoin like Tether, or a meme coin like Pepe, choosing reliable sources protects you from unwanted risks.
Look into spot crypto ETFs
Exchange-traded funds (ETFs) are among the most popular decentralized assets, as they enable users to interact with cryptocurrencies like Bitcoin without requiring an exchange. BTC ETFs are in high demand, as they track the price of the asset, offering convenience and diversification. ETFs also offer tax efficiency, as they trade on traditional exchanges and are eligible for tax treatment under SEC regulations.
BTC ETFs are approved by the SEC, as are Ethereum ETFs. However, more options will become available in the future as companies file for ETFs backed by Solana, XRP, or even Litecoin. With this regulatory improvement in the works, investors hope it will pave the way for better surveillance mechanisms and greater transparency in the crypto industry.
Earn rewards by playing
While investing is more professional, you might want to explore a special part of crypto with play-to-earn (P2E) games. These are games on blockchains that enable players to engage in innovative gameplay and earn rewards, typically consisting of gaming tokens that can be exchanged for other coins later.
While these rewards are not necessarily significant, they’re a great way to gain more exposure to the market. You can play games such as the following:
- The Sandbox is a metaverse game where you can make friends, go on quests, and visit art galleries. You can also create your own world and assets that can be sold in the marketplace;
- Axie Infinity is a decentralized world of mystical forests and cute creatures called Axies you can use to earn rewards by engaging in battles;
- Gala is a platform offering a vast array of games, empowering players with NFTs for ownership of their in-game assets;
Research on asset diversification
Using your cryptocurrency for investments is most lucrative when you diversify your assets to gain benefits and opportunities across different industries. Diversification offers numerous benefits, including mitigating the impact of an asset’s underperformance and enhancing stability, particularly during challenging market periods.
As a beginner with crypto, it’s ideal to include these coin categories and spread them evenly based on risk levels:
- Established coins like Bitcoin and Ethereum should be about half of the entire portfolio, as they will provide the most stability;
- Altcoins like Solana and Cardano are best for their technological advancements, but they tend to be more volatile, so 30% of altcoins is best;
- Stablecoins like USDT and USDC are pegged to fiat money, so their value stays the same, but since they don’t provide as many rewards, a 20% investment is ideal;
Be wary of crypto risks
As interesting and lucrative as it is, crypto can become dangerous for someone who is not aware of its issues. Volatility is one of the biggest challenges investors and traders face, especially when it comes to dynamic assets whose value is determined by unstable factors.
Meme coins, for example, are known for being highly volatile, as their prices fluctuate based on community influence or social media exposure. There were numerous instances in which popular figures, such as Elon Musk, triggered a massive price surge after tweeting about an asset, like Dogecoin.
Another risk is linked with scams. Although blockchain technology and cryptocurrency transactions are among the safest, considering encryption and decentralization, hackers can still find ways to manipulate crypto users into disclosing their account information.
Common crypto scams include:
- Romance scams in which scammers gain a person’s trust romantically and persuade them to share account information;
- Crypto giveaways claim to offer users free coins if they perform a simple task, but these usually include a necessary payment to be eligible;
- Crypto phishing includes fake emails in which the recipient is coerced into acting as fast as possible or clicking a suspicious link that gives the scammer access to the person’s accounts;
Final considerations
Cryptocurrency is one of the latest and most advanced forms of exchange and transactions, laying the base of future innovation with blockchain technology. Investing or trading in crypto can be challenging, but it can also offer potential results and help gain experience by exploring ETFs for added safety or diversifying a portfolio to balance wins and losses. Moreover, it’s always best to keep an eye on scams and volatility risks, since they’re prominent issues in the industry.