The ever-volatile cryptocurrency market has hit a particularly brutal stretch in recent days, with about $400 billion in value being wiped out from the overall digital currency market over the last week, Business Leader reported Thursday. That means it’s a great time for savvy investors to step in and scoop up some bargains, right?
Well, maybe — if you do it the right way.
Some financial experts remain bullish on the crypto market, even amid news that a major Bitcoin mining operation in China was ordered to shut down, sending Bitcoin below $30,000 earlier this week — the first time that’s happened since January — before it later rallied.
The key for investors is to ignore the short-term swings in value and stay focused on the long game, experts say.
“It’s our experience that investors are not in crypto to make a quick buck,” Nigel Green, founder and CEO of deVere Group, told Business Leader. “They’re in it as a longer-term, future-first investment to create and build wealth.”
Smart investors “aren’t spooked by the current volatility,” he added, but are “confident in their longer-term trajectory.”
Green’s confidence in crypto is rooted in a number of trends. One is the ongoing transfer of wealth to millennials who were raised on technology and understand the digital currency market. Another is the fact that cryptocurrencies are under increased regulation, which indicates that crypto is being taken more seriously as a financial asset and medium of exchange.
But even financial experts who back crypto say you shouldn’t bet too much of your portfolio on it. Nate Nieri, a Certified Financial Planner with Modern Money Management in San Diego, told Time magazine that crypto investors have a “high chance of losing it all, but a small chance of winning it big.”
“Don’t gamble an amount that would burden your family or prevent you from achieving your goals,” Nieri said.
To help buffer yourself from the volatility, many experts recommend keeping your cryptocurrency investments to less than 5% of your overall portfolio. This way you won’t worry so much about manic swings in value — which you can expect to happen on a regular basis, according to Bill Noble, chief technical analyst at Token Metrics, a cryptocurrency analytics platform.
“Volatility is as old as the hills, and it’s not going anywhere,” Noble told Time. “It’s something you have to deal with.”
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