How Much Should You Invest in Crypto?

Dec 10, 2021 10:53:55 AM | cryptocurrency How Much Should You Invest in Crypto?

Wondering how much you should invest in crypto? This article should give you some initial guidelines to get started.

This article is for informational purposes only. The information is not meant to be and does not represent, financial, investing, trading, or other types of advice or recommendations.

Cryptocurrency is one of the most attractive forms of investment, and you're not alone if you're undecided about buying. According to Statista, at the end of March 2021, the number of Blockchain wallets, which allow users to set up their crypto portfolio, had surpassed 70 million users.

However, many people think they’ve missed the train and that they are too late to invest now. If you are one of them, let’s get this straight: You’re not late. For example, in comparison to the S&P 500 index's major hitters, Bitcoin represents a little slice of the global investment pie in terms of market value. This means that there still is room to grow. 

What is more, the entire worldwide market value of all cryptocurrencies was $2.19 trillion in October 2021, making it the world's eighth biggest economy by gross domestic product (CoinMarketCap). 

While several cryptocurrencies saw a price drop earlier in 2021, they are now gaining traction. Bitcoin, for example, is once again on the rise. Is it time to invest now that crypto prices have recovered? More importantly, how much should you invest in crypto? Here's all you need to know about it.

Is Cryptocurrency a Safe Investment? 

Cryptocurrency is classified as a "high risk, high return" investment. Because it's still very speculative at this stage, it's riskier than investing in equities.

Stocks have a lengthy history of increasing in value over time, but cryptocurrency is still in its infancy. While it has the potential to become widespread and has real-world applications, no one knows for sure.

This isn't to say that cryptocurrency is a poor investment or that you shouldn't invest in it. If it becomes useful in the real world, it has the potential to transform the world—and those who invested early on might profit handsomely. However, before you buy, you should think about your risk tolerance.

You could be a good candidate for this sort of investment if you're prepared to take on some risk in exchange for the chance to make a lot of money.

How Much to Invest in Cryptocurrency? 

Most Bitcoin (and other cryptos) investors believe blockchain, the technology that secures crypto transactions, is game-changing. However, their assets are still insignificant, accounting for about 1% to 5% of their total portfolio. Successful cryptocurrency investors also use a dollar-cost-averaging approach, which entails investing in regular, equal amounts over time.

Before investing, it is important to know this:

  • Invest an amount you won't regret losing. If you wish to invest, never take out a loan. You can only take such a risk if the product generates profits through its interest. If you neglect to consider this guideline while purchasing a digital system, you may have regrets.
  • If you want to make some additional money, go ahead. You could work for active income indefinitely. The extra-passive income is the amount that lasts the longest. If you reach a stage where you have more passive cash than active cash, you can decide not to work and still have enough. The rich are the ones who can afford to do so since they can invest in a variety of financial goods and receive higher returns.

How to Decide How Much to Invest? 

Here are some factors to consider when you’re thinking about how much you should invest in crypto. 

  • Time. When it comes to investing in virtual money networks, timing is everything. When the price of bitcoin rises, you'll undoubtedly hear a lot about it. In terms of price, the exact reverse occurs during the low season. Investors and observant social media users like keeping up with current events.
  • Risk tolerance. Consider the likelihood of success and the worst-case scenario in the event that the unexpected occurs. Consider what would happen if you invested this money in the future. Make it a rational decision instead of an emotional one. 
  • Space for changes. Allow yourself the possibility of changing your mind later when determining how much to invest. It's simpler to achieve this by investing at three-, six-, or twelve-month periods. Investment sequences that are gradual and progressive might help you better understand yourself. After that, you may rely on investing a significant amount during the best market cycle to maximize your profits.
  • Fluctuation. It's worth noting that cryptocurrencies have nothing to do with other sectors like real estate, gold, or finance. Gold and stocks, for example, are proportionate in a roundabout way. Cryptocurrency has nothing to do with bonds or stocks. It can live without relying on other elements. Looking at this perspective, investing in Bitcoin, for instance, is better, but volatile. Diversification is the best option. Invest in stocks, real estate, and other assets, in addition to cryptocurrency.

Invest Safely

If you still feel scared to start investing, here are some tips on how to invest safely: 

  • For starters, invest a really small amount in a crypto exchange. This way, you'll be able to get started and have a greater knowledge of what it means to invest in cryptocurrencies.
  • Divide the budget you've set aside and invest it over a period of time. It's up to you whether you want to stay for a month, three months, or twelve months. However, doing so will save you money and prevent you from making costly mistakes.
  • Keep in mind that you may always reconsider your decision afterward.
  • Choose a platform that guarantees safety and transparencyLendary is coming at the beginning of 2022. Subscribe to be the first to know about new and safe crypto investment opportunities. 

Check out our other blog posts on the topic:

Wrapping up 

The greatest investments are those that will continue to increase over time, so make sure you're looking for cryptocurrencies that will help you in the long run rather than those that will make you rich overnight.

You need to understand that the market is still young. Investing in anything new comes with its own set of problems, so you must expect ups and downs. Although cryptocurrency is risky, it is a very good investment if you do it right. Make sure you can afford to invest and are okay with risk and volatility before you buy. Cryptocurrency might not be for everyone, but it may be a good investment for you.

Sara Miteva

Written By: Sara Miteva