According to one study recently, 8% of French people already own cryptocurrencies, compared to 3%* in March 2021. In addition, 30% of French people plan to acquire cryptocurrencies. A set of data that allows us to observe and note the ever-increasing appeal of the French for investment. To allow as many people as possible to take the first step and support investment neophytes, Vivid Money shares his tips for better investing in cryptocurrencies.
1/ Focus on diversification
Whether you are a new or experienced investor, diversifying your investments is essential. When you take your first steps in investing, it is essential to observe market developments and be able to understand them in order to make more informed decisions. Diversifying your portfolio is therefore an excellent way to limit the negative impact of an investment that has lost value.
2/ Favoring the long term in the face of volatility
Cryptocurrencies, such as Bitcoin or Ethereum, have a value with strong fluctuations and surely represent the cryptos in which it is safer to invest.
For example, since the beginning of 2021, the value of bitcoin has fluctuated wildly. While the coin was trading at just under $30,000 at the start of 2021, its value exploded to almost $65,000 in mid-April 2021. A few months later, at the end of July, bitcoin had seen its price drop by half around $30,000, before rising once more and hitting a record high of $67,000 in November, then plunging again. It is now trading around $44,000, up almost 60% since the start of 2021.
A variation of curve which analyzed, makes it possible to observe and translate a very present volatility of the cryptocurrency. Therefore, it is preferable to consider such an investment over the long term, in order to be able to observe, analyze and anticipate variations. It is also essential not to be taken in by the panic or the euphoria that can accompany volatility.
To invest and in particular in cryptocurrencies, it is necessary to carry out all the research to make an informed choice. To understand how cryptos work, it is better to do some research beforehand. These can in particular focus on the most popular cryptocurrencies, which already makes it possible to carry out a first sorting among the many coins that exist. Indeed, investing in a cryptocurrency with more notoriety makes it possible to limit the risks, even if it is always necessary to exercise caution.
What are scams? This question may seem strange, but it is nevertheless to be taken into account. Finding out about the cryptocurrency in which you are investing, by checking for example if it has already gone through a few periods of volatility, allows you to better understand any abnormal situations or ill-intentioned people.
BONUS : Sectors to follow closely
2022 should be the year in which cryptocurrencies could quickly become institutionalized, as traditional financial organizations begin to equate them with traditional assets like bonds. The more these big institutions get into cryptocurrencies, the more we can expect the value of mainstream currencies to align with global markets.
Additionally, the European Central Bank and the US Federal Reserve are studying the viability of launching digital currencies, following the example of many other countries, including China and Nigeria. Finally, the world of GameFi, also known as ” play-to-earn games“, is experiencing a resurgence in popularity at the moment. It is a virtual game system where players can earn digital currencies, which would change the current model of video games in terms of lucrative entertainment. The concept’s success remains to be seen, but if the idea remains popular later in the year, it could live on.
* According to a study FIFG
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