Cryptocurrencies are becoming increasingly popular as more people become aware of their potential usage in their lives. And as this adoption grows, more and more people are getting into crypto, but usually, right at the market’s peak, where prices are super high, FOMO (fear of missing out) seeps in.
The market has come a long way since these 2021 all-time highs (ATH). Today, “blue chip” cryptocurrencies like Bitcoin (ETH) and Ethereum (ETH) are down 69% from their peaks. The majority of altcoins, meanwhile, have lost 90% to 99% of their value. So, does it make it the best time to buy back into crypto?
Well, the best time to buy crypto was when it was first launched. The market was new, and there were plenty of opportunities to profit. But, over this past decade, as the market has matured, it has become more challenging to profit from investing in crypto.
That’s not to say there aren’t any opportunities now. With the sector growing, tech advancing, and new narratives taking shape, there are many opportunities for you to take advantage of. However, it has become far more difficult to profit as the sector attracts more users.
But with crypto in a bear market, this is certainly the next best time to get in. With prices so low, it makes sense for people to try and build a diversified portfolio now.
With new cryptocurrencies continuing to release and old projects building and improving, this is likely to create demand in the market that would not have been there before as people look to take advantage of this opportunity by investing in these tokens for the long term.
A Good Time to Buy?
As we are currently seeing, there is hardly any new blood or demand in the crypto market, with both institutions and retail either wiped out or having taken profits. This has resulted in a dull market, with prices not doing much.
With prices so low, it’s the ideal time to buy into crypto and diversify your holdings. High net worth individuals (HNWI) have already fully embraced cryptocurrencies, with 71% of wealthy individuals investing in digital assets, according to technology consulting company Capgemini’s 2022 “World Wealth Report”.
Funds and HNWIs are using crypto to beef up their investment portfolios and make them stand out from the meagre gains of the stock market. Although there are wild fluctuations in the cryptocurrency market, investing in a few different currencies that can help you capture different narratives can help spread risk across different market conditions.
The world’s wealthiest people and crypto whales are unperturbed by the low levels. They are using this opportunity to scoop coins to construct more resilient portfolios in preparation for the next bull market.
According to the Private Wealth in Digital Assets Study, four out of five HNWIs and family offices were already invested in digital assets. The majority of sophisticated investors, who hold up to 25% or more of their portfolio in digital assets, indicated that their investment strategies are maturing as they become more familiar with digital assets.
It is crucial to keep in mind that investing in cryptocurrency is a long-term investment. Despite current lows, the value could rise substantially if the broader adoption of digital currencies continues. Investing in crypto now allows one to acquire good-priced coins with potential for future gains, otherwise known as ‘buying the dip’.
There is a reason ‘buy the dip’ is a popular investment strategy that involves buying assets when they are experiencing a dip in price. The strategy is based on the belief that the price of an asset will eventually rebound and reach new highs.
Following this strategy allows investors to buy assets at a discount. For instance: the popular meme coin Dogecoin (DOGE) was trading at about $0.001 in March 2020, only to hit $0.80 in May 2021 and is currently trading at $0.0888, according to CoinGecko.
This means buying an asset during a broad down market leads to greater profits when the asset price eventually recovers. And by buying assets when they are down, investors can also offset any losses from other investments.
Despite the benefits, it is important to remember that an asset may never recover from its dip and continue to decline in value. After all, the crypto market has declined since late 2021, and it still can’t be said if the bear market is over yet. Deploying capital on every dip can lead to significant losses. Still, buying the dip is a risky but potentially profitable investment strategy.
Building a Portfolio
When investing in crypto, understanding the underlying investment thesis and cryptoeconomics is important. Understanding the asset you own is key to any successful investor, and with the current market condition, there are pros and cons of investing in crypto.
While crypto prices are experiencing relief in 2023, they are barely off their 2022 lows. It is widely believed that crypto is still in a broad down market, and with the US Federal Reserve raising interest rates, borrowing money is not cheap anymore. Additionally, these rising rates mean investors can get guaranteed returns on their cash, making the uncertain crypto and stock market comparatively unattractive options.
While investing in crypto right now may not seem like the best decision for the short term, funds, HNWIs, and crypto veterans are using this opportunity to build their long-term portfolios. Even those who are new to crypto investment can benefit from buying now, as it’s a great way to save money and make gains in the long term.
After all, crypto is not going anywhere and is considered a good investment alternative to stocks and other less lucrative options. They are becoming an increasingly popular alternative to traditional investing methods as it offers more flexibility and security than traditional investments.
But when deploying capital in the market, investment goals should be assessed as risk tolerance varies from individual to individual. The importance of building a well-rounded portfolio cannot be overstated here, taking into account the volatility of cryptocurrency markets, which offer both opportunities and risks for investors looking for potential gains or losses.
The future of crypto investments is uncertain, but with low prices, it’s an ideal time for term investors to buy into assets and build a portfolio before prices increase again. As investment shrinks in many other areas, such as stocks, bonds, and savings accounts, crypto may become one of the few viable options in the future.
Looking for Attractive Options
While a good opportunity for investors to build their portfolios, what is your best option? The larger cryptocurrencies such as Bitcoin and Ethereum have seen broad investor interest in recent years, with big banks like JPMorgan, Deutsche Bank, Wells Fargo, Citigroup, and Bank of America, along with tech giants Like Tesla and Block (previously Square) delving into the industry.
Bitcoin is still the most popular cryptocurrency today, and investing in it may be an attractive option due to its real-world uses and potential future growth. When Bitcoin was first launched in 2009, it was hailed as a revolutionary new technology that had the potential to change the financial world. But this leading crypto has already seen most of its upside, from $1 in 2011 to $69,000 in 2021.
However, the liquidity this crypto provides, which achieved a trillion-dollar market cap at its height, makes it the perfect option for institutions, funds, and HNWIs looking to deploy huge capital in the crypto market. Bitcoin is also a good indicator of overall industry health.
But while altcoins make for an attractive option for retail, they are riskier than majors like BTC and ETH. As such, building a well-rounded portfolio can be beneficial for those looking for returns from cryptocurrency investments now and into the future. But, of course, not all altcoins are equal.
While cryptocurrencies are recording heightened institutional interest, several coins like Tron (TRX) and Zcash (ZEC) didn’t manage to breach their 2017 highs in the latest bull market. So, be careful of picking up coins based on how low-value they are. Instead, build a portfolio on those that show perceived strength.
Another thing to keep in mind is investing in cryptocurrencies should not be considered a quick scheme or get-rich-quick idea; instead, it should be looked at as an investment into long-term opportunities. Investing in cryptocurrencies can yield great returns, but one should always do research before investing, as there are many scams out there.
Innovations underpinning cryptocurrencies have transformed how people view money, finance, and investments. The ingenious technological innovations have made it possible to transform nature’s resources into digital currencies capable of triggering transformative changes worldwide.
Cryptocurrencies have a clear future and have found their way not only into retail portfolios but also institutions and even countries. This means it is the perfect time to buy low, build a strong portfolio, and wait for the market to rebound.