By Many people wonder if it’s still a worthy investment to purchase ETH or BTC. The answer depends on both your personal risk tolerance and overall investment goals. Investing in cryptocurrencies are far riskier than traditional asset classes. Though many people have enjoyed sizable returns by investing into both Ether and BTC, others have lost capital just as quickly.
For example, if you had invested $100 in BTC in 2010, you would now have a $5 million-dollar position. On the flip side to that equation, if you had purchased BTC in December of 2017 at or near its all-time high of $19,000, you would currently have experienced a considerable loss (As of July 2018).
Overall, however, cryptocurrencies pose a huge potential and according to The World Economic Forum, by 2023, the market is estimated to grow to be worth $10 trillion in total market cap by then. More on that study can be found here. Currently, the overall cryptocurrency market cap is around $300 billion. This means the overall sector is estimated to grow 3500% over the next 5 years. This potential far outshines conventional stocks, property, commodities or just about any other investment type.
It’s Worth it if You Can Handle the Risk
If your goal is to make maximum potential returns, and your tolerance for risk is on the higher side of the spectrum, investing in both BTC and Ether (ETH) can be just the investment you are looking for. If, however, you are looking for a slow and steady return in a market that is well regulated, cryptocurrency is likely not the best option for you. Let’s look at the BTC price chart below to get a better understanding.
Here, you can see that though the investment potential is great, the volatility of the market is somewhat unpredictable. Big swings of 10-20% in a single day are not uncommon. This chart represents just a 5-day period in early February 2018 of the USD to BTC price.
On the other hand, for those looking to the sector for longer-term growth, this chart is a one year look at BTC performance;
The overall growth through the 2017 year was phenomenal and equated to nearly 1500% gains for investors who held BTC through the year. Ethereum performed very similarly in both charts and actually outperformed BTC in terms of growth, increasing against the US dollar 4500% in 2017
The Volatility is Good for Traders
While these kinds of wild rides are not for every investor, they do pose an opportunity for those who actively trade. Considering the price swings, day trading either BTC or Ethereum can be very profitable if done by a professional who understands the markets.
For example, in a single day, if you were to buy at major price dips and sell at or near price peaks, a profit of 2-5% per trade can be realized. In the 5-day price chart above, if you had purchased on the three main price dips and sold at the peaks, the overall returns would have been close to 40%.
The problem is that most investors who attempt to day trade end up getting caught in “bull traps” or buying too late coming out of the dip. Additionally, for those who buy and hold for the long haul, they risk not maximizing their capital, as profits are not taken when the market peaks. Professional traders, on the other hand, take advantage of these fluctuations by using strategies and techniques that the average investor doesn’t know.
For example, setting stop-loss orders, shorting the market, or setting buy limit orders above resistance levels can all vastly increase success and portfolio growth while minimizing risks.
Invest with the Help of Professional Insight
Most people fail to understand these principles and 99% of people in the crypto-sector manage their own portfolios. In the conventional stock or forex markets, less than 1% manage their own portfolios and leave trading to a professional. The reason for these investors’ recent success is that the markets have been generally trending upwards (bull market) for the last year 2017. However, while it is easy to make returns in a “bull market” when the market is falling it can become much more difficult for the non-professional trader.
Additionally, as cryptocurrency is a 24/7, 365-days-a-year market, most people don’t have the time to actively trade and take advantage of these opportunities.
CoinBeat is a great option for these types of people who are a bit less active and experienced but still want to trade actively. CoinBeat is a publication that connects investors with world-class cryptocurrency traders, writers, analysts and industry insiders, allowing them to piggyback and mimic the positions and strategies of these pros and tap into their access to information. Make sure to subscribe and stay informed on the latest information from around the sector.
In conclusion, while it is potentially worth investing in BTC or Ether, to truly make the maximum possible returns you need to actively trade. If you are looking to invest a small amount for a later date when BTC is worth millions, that day may never come. That being said, if you are looking for an emerging market with huge potential, investing in BTC or Ether may be the boost your investment portfolio is in need of.
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