I Was Scared To Invest In Crypto — Here’s What Changed My Mind
Written by
Sean Bryant
Edited by
Chris Cluff
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Unless you’ve been ignoring financial news over the past several years, you’re well aware of the popularity cryptocurrencies have achieved. They’ve helped many people become “crypto millionaires” almost overnight. But for some people, it became an addiction.
Most crypto coins have extreme volatility swings, complicated technicals and very little regulation. So, while there’s an opportunity and people have become rich, many still hesitate to invest in the crypto market.
“When I first learned about Bitcoin in 2014 during my MBA studies, I was quite skeptical of its viability and very cautious about its legal status, since there was no regulatory framework at the time,” said Ron Stefanski, a business thought leader and the founder of BusinessGuru.co.
“I remember discussing Bitcoin with my entrepreneurial finance professor and he shared an anecdote about his niece who had invested $1,000 in Bitcoin in 2012 and seen her investment grow to over $50,000 by 2014. While this was an intriguing story of high returns, it also gave me pause, as the dramatic volatility seemed extremely risky. I decided to hold off on investing at that point due to the unfamiliarity and uncertainty in the early crypto market.”
Most people invest their money based on research and understanding of an asset. For example, someone invests in Apple because they believe it’ll continue developing new products that sustain a moderate to high growth trajectory. This research and knowledge give them confidence that their investment will grow.
Crypto has always been an entirely different ballgame. While you can predict price movements based on technical analysis, understanding where a coin goes because of fundamentals is mostly unknown. This is why many small investors and large institutions have hesitated.
“Beyond the typical concerns of volatility and regulatory uncertainty, my reservations about crypto were tied to a lesser-known fear — the fear of the unknown,” says Artem Minaev, senior investment advisor and co-founder at CryptoDose. “The vastness and complexity of the crypto landscape felt overwhelming, especially as I lacked a deep technical understanding. The fear of making uninformed decisions and the anxiety of missing out on opportunities due to my limited knowledge kept me on the sidelines.”
Let’s deep-dive into the present and future of crypto investments.
Changing People’s Minds About Crypto
Over the past couple of years, more and more businesses have started accepting digital currencies. For example, you can purchase movie tickets from AMC Theaters with Bitcoin. Or you can buy your Starbucks coffee with Bitcoin or Ethereum. With greater adoption by major retailers, more people will likely accept crypto as a valid currency.
But for some, it’s going to take more than that. They want tangible proof that crypto is a safe and reliable currency.
“Rather than succumbing to the fear of financial loss, I began exploring unconventional investment perspectives in crypto, says Minaev. “The investment strategies, such as dollar-cost averaging and focusing on long-term fundamentals, provided a refreshing alternative to the speculative mindset often associated with cryptocurrencies. Understanding these approaches eased my fear of market volatility and created a more sustainable investment mindset.”
For a long time, prominent financial institutions have been critical of crypto. Jamie Dimon, CEO of JP Morgan, has been critical for years. He even recently referred to Bitcoin as a ‘pet rock.’ However, JP Morgan has tripled the number of people working in the blockchain unit, and they handle $1 billion daily in blockchain transactions.
“My perspective really started to shift when major institutional players like Fidelity, NYSE, and JPMorgan began moving into the space,” said Stefanski. “The regulatory environment also matured substantially. This growing legitimacy implied that blockchain technology would likely transform finance in profound ways, and could no longer be dismissed as some passing fad.”
How To Invest in Crypto Safely
If you have the risk tolerance to handle crypto, it’s a great way to add additional diversification to your portfolio when done safely.
Never Invest More Than You Can Afford
When the crypto craze started taking off, people wanted to jump on the bandwagon. They had a severe fear of missing out. With such significant volatility, people lost a lot of money on the downswings. One of the most significant rules when investing, especially in crypto, is not to invest more than you can afford to lose.
Dollar-Cost Average Into a Position
Crypto prices can fluctuate considerably in a very short period. If you’re interested in investing in a particular coin, it’s best to dollar-cost average your way into the position. Instead of making one large purchase, make several smaller purchases over a more extended period. This will allow you to buy into price drops and still make money.
Stick to the Major Currencies
While smaller currencies have a greater chance of seeing huge price appreciation, they can also suffer the biggest losses. If you’re just starting to get your feet wet in crypto investing, stick with the largest coins, such as Bitcoin and Ethereum. These coins have larger market capitalizations and products such as ETFs built with them.
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