The lure of earning a great fortune by investing cryptocurrency in recent years it has attracted investors from all over the world, but the collapse of much of that value in recent months offers an instructive lesson in market volatility.
Local experts say this volatility should lead anyone who considers cryptography a critical necessity before entering the market – do your own research.
Learn before you win
Gordon Gulledge, Greenville’s in-house cryptocurrency specialist Foster Victor Wealth Advisors, says he became involved with the crypto about nine years ago, in part due to the growing curiosity of his clients. He soon realized that there are some key aspects of this emerging market that any investor should always keep in mind.
The blockchain technology on which cryptocurrency is based has enormous long-term potential for a variety of applications, says Gulledge. But cryptocurrencies are highly speculative and therefore tend to be inherently volatile as an investment.
What happened to the value of Bitcoin, the first cryptocurrency and still the most commercialized, is illustrative, says Gulledge. It lost about 60% of its value from a high of $ 69,000 for Bitcoin in November 2021 to a low of about $ 25,000 in early May 2022.
“You just have so much control, either with the traditional markets or in this market,” Gulledge says. “‘Do your own research’ sounds so cliché … but once you’re in that market it can get to zero quickly.”
It also says that much of the hype generated around cryptography is driven by social media and that for every individual who reports making a lot of money in crypto, there are probably “10 or 20 people” who have lost a lot of money.
Gulledge says reports of people earning millions or billions of dollars in cryptography can lead to a fast-paced enrichment mindset that is never a good reason to enter such a volatile market.
Dylan Flasky, a cryptocurrency and NFT (non-fungible card) consultant in Greenville, describes an impulse as FOMO: the fear of getting lost. He’s been active in cryptography for years and says that if you’re hearing a lot about an investment opportunity in cryptography on social media, it’s probably too late.
“There are always winners and losers in everything,” he says. “That’s why it’s important to be educated … You have to be highly educated about what’s going on in the market.”
Don’t be in a hurry
A corollary of doing your own research, says Gulledge, is not to rush.
“You don’t have to rush,” he says. “Take your time [and] learn what you are getting into. This market is going to be cyclical like everything else. “
Gulledge and Flasky say the fear of getting lost is often what leads crypto investors to make bad decisions. The fear of missing a golden opportunity can lead people to rush before they learn enough to understand the risks.
“A lot of people don’t want to spend time learning,” Flasky says.
Instead of following that push to get in, he says people should see the market every day to understand their cycles before investing money. A good resource is Coinbaseone of the most popular online markets for cryptocurrencies, which offers a wealth of information on market trends.
Flasky says another resource, perhaps surprisingly, is YouTube. The appointment BitBoy Crypto as a channel that provides a regular and complete summary of trends in the crypto market.
Gulledge says another good rule of thumb is to consult someone you already trust to get to know the market. With so many unscrupulous people involved in cryptography, developing reliable sources of information is critical.
“It simply came to our notice then [the market’s] it’s going to be volatile and you have to understand what your game plan is, before you put money in, not after, ”says Gulledge.
Key terms to know
Cryptocurrency: These are digital assets created using encrypted blockchain technology. Bitcoin was the first widely used digital currency. Ethereum is the second most popular cryptocurrency.
Blockchain: A type of encrypted database distributed over a global network of computer servers. This distributed logging system is difficult to hack as transactions are logged on all blockchain servers.
Cryptowallet: A cryptographic or digital wallet uses blockchain technology to give its user a unique digital identity. This digital signature becomes part of the blockchain and identifies the property.
Digital Asset: This is a type of investment linked to blockchain technology, ranging from one of more than 20,000 cryptocurrencies to the host of non-fungible tokens.
“Pump your own bags”: Term used in the cryptographic world to refer to the practice of the owners of a particular digital asset that promotes the value of that asset to attract buyers and increase value.
FORM: Fear of Missing Out is the impetus for certain investors to enter the digital asset market as a crypto before fully understanding the risks.