Is Cryptocurrency Right For Cautious Investors?

Business men in suits playing Jenga

Cryptocurrencies, and bitcoin in particular, have grown in popularity over the past few years, becoming far more acceptable among mainstream investors.

But those who err on the side of caution, minimising risk with every transaction, may still be unsure about putting their money into such a new investment product.

Although crypto won’t be for everyone, it can absolutely be a suitable choice for the more cautious investor – as long as you understand the type of investment that you’re making and choose the right currency.

A long-term asset

Interest in crypto continues to grow, aided by the support of a strong online community as well as many celebrity endorsements. As more people begin to use popular coins such as Bitcoin and Ethereum, and online shops begin accepting them as a payment method, they become more legitimate. This in turn aids future growth, and means that crypto becomes a slightly safer bet for the cautiously minded.

This only works if you’re willing to invest over a period of several years. In that time, a currency’s value is likely to swing from high to low and back again. So far, Bitcoin’s value has always trended upwards over time, and those who know the market predict that this will continue.

Benefit from high liquidity

Many cryptocurrencies have also become popular due to their high liquidity. It’s a good idea for all investors to have some liquid assets, which can be quickly converted to cash (without losing value) should the need arise.

Out of all the different currencies available, Bitcoin is typically considered to have the best liquidity. With so many people buying and selling Bitcoin every day, it’s easy to find a buyer when you want to. The various cryptocurrency exchange platforms make the process smooth and painless.

Compare this to something like real estate. You may own some valuable property, but unlocking that cash requires a lengthy process of marketing the property, finding a buyer and waiting for the purchase to complete.

Don’t rely on the stock market

Diversification should be important for any cautious investor. If you’re betting your investment solely on the stock market, then you’re leaving yourself vulnerable to a potential crash. The value of cryptocurrency doesn’t follow the stock market, so investing a portion of your portfolio there helps to give you some resilience.

Consider trading as an alternative path to success

More risk-adverse investors may worry that holding Bitcoin or an alternative cryptocurrency for a long time doesn’t offer enough of a guaranteed return on investment. In this case, you might want to consider crypto trading as an alternative option.

Because trading is more about making well-timed transactions based on price fluctuations, rather than holding currency over a long period, it can be a more viable option for those who want to quickly start generating an income.

Trading apps such as crypto engines will help by analysing the market and telling you exactly when to make those trades. You can get started with just a small amount of money to make sure it’s right for you, and use the software’s automatic trading function to familiarise yourself with the market.

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