Investing sometimes resembles gambling. There is no way to predict whether a particular cryptocurrency (in the next month or year) will gain or lose value. Many people have made a fortune by investing in Bitcoin and other cryptocurrencies, but many people have also lost money on such investments. In addition to deciding which cryptocurrencies to invest in, it is worth remembering that choosing the right time to invest is a key issue.
Cryptocurrencies … How to understand?
Predictions or fortune-telling seem to be of little help when it comes to timing the right time to make an investment. Investing guru Warren Buffet said that the first best time to invest in cryptocurrencies was a few years ago, and the second best time is now.
Buffett’s observation may seem unhelpful, but he is absolutely right. Cryptocurrencies such as Bitcoin have experienced legendary price ups and downs, but the overall trend is upwards. Over the past 10 years, Bitcoin has provided investors with an annual growth rate of 116.41% in total. By contrast, an investment of €100 made in 2011 would be worth €200,000 a decade later – and that’s despite the sharp changes in Bitcoin’s value that investors faced in the spring and summer of 2021.
If an investor had invested the same €100 in a NASDAQ fund, they would have a compound annual growth rate (CAGR) of 17.77%, and a decade later, almost €5000. It’s not that bad, but it’s not 200,000 euros. Cryptocurrencies invariably outperform stocks, commodities, and bonds by both small and large investors. If you know how to invest in cryptocurrencies — and with Kriptomat, that’s a breeze — you can start building your investment portfolio in minutes.
It’s all about time, not the moment
Short-term investors have developed hundreds of complicated theories about the days of the week or hours that might seem like the best time to invest. Such traders browse candlestick charts, looking for patterns that allow them to buy before the market price rises or sell just before the price drops. Every year, thousands of investment advisors write books and articles full of strategies to determine the right time to buy and sell.
It is true that some of this advice is helpful. However, most of them are speculative. No method of choosing the right moment guarantees good results.
Experts say that the best way to build a portfolio is not to buy cryptocurrency at the right time, but to make investments and hold them until they pay off – focusing on time, not the moment. The overall trend in the cryptocurrency exchange has historically skyrocketed. Yes, some coins and tokens have lost value. There are times of the week and months when prices can be well below what you paid. However, in the long run, most investors who are not in a hurry to buy or sell cryptocurrencies reap the benefits.
One of the best methods to compensate for market price fluctuations when building a portfolio is to make small investments on a regular basis. Investing €25 every week or €200 every month is a painless way to build your portfolio with small amounts that you won’t even notice losing. This can prove to be an excellent strategy if you’re saving for retirement or opening up a fund to pay for your children’s college tuition.
Many investors also find it prudent to invest in many different cryptocurrencies or to include several cryptocurrencies in an overall strategy that also includes traditional investing in stocks and other assets. Diversity is a good hedge against the poor performance of individual investments. But this is not the answer to the question asked earlier. At this point, it is worth considering what is the best time to invest in cryptocurrencies. For many of us, the answer is: right now.