Despite the instability, cryptocurrency remains a legitimate investment

The lure of earning huge fortunes by investing in cryptocurrency has attracted investors from around the world in recent years, but the collapse of much of that value in recent months has taught a sobering lesson about market volatility.

Local experts say that this instability should lead anyone who considers crypto a critical need 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 it messed with crypto about nine years ago, in part because of growing customer curiosity. He quickly learned that there are some basic aspects of this emerging market that every investor should always keep in mind.

The blockchain technology on which cryptocurrency is based has huge long-term potential for a variety of applications, Guledge said. But cryptocurrencies themselves 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 widely traded, is illustrative, says Gulledge. It lost about 60% of its value from the highest $ 69,000 for bitcoin in November 2021 to the lowest of about $ 25,000 in early May 2022.

“You just have so much control, whether it’s traditional markets or that market,” Gledge said. “Do your own research” sounds so cliché… but once you’re in this market, it can go to zero pretty quickly.

He also says that much of the noise generated around crypto is driven by social media, and that for every person who reports making a lot of money in crypto, there are probably “10 or 20 people” who have lost a lot of money. .

Gledge says reports of people making millions or billions of dollars in cryptocurrency can trigger a quick-money mentality, which is never a good reason to jump into such a volatile market.

Dylan Flasky, cryptocurrency and NFT (irreplaceable token) consultant in Greenville, describes such an impulse as FOMO – the fear of missing out. He has been active in crypto for years and says that if you hear a lot about the possibility of crypto investment in 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 happening in the marketplace.”

Do not hurry

The consequence of doing your own research, says Gledge, is not rushing.

“You don’t have to hurry,” he says. “Do not hurry [and] learn what you are doing. This market will be as cyclical as anything else. “

Gulledge and Flasky say the fear of leaks is often what drives crypto investors to make bad decisions. The fear of missing a golden opportunity can make people rush before they have learned enough to understand the risks.

“A lot of people don’t want to spend time studying,” Flaski said.

Instead of following this impulse to jump, he says people need to monitor the market every day to understand its cycles before investing money. It is a good resource Coinbaseone of the most popular online cryptocurrency markets, which provides rich information on market trends.

Flasky says another resource, perhaps surprisingly, is YouTube. He quotes BitBoy Crypto as a channel that offers a regular, comprehensive overview of trends in the crypto market.

Gulledge says another good rule of thumb is to consult with someone you already trust to start learning about the market. With so many unscrupulous cryptocurrencies, developing trusted sources of information is key.

“You have to understand that [the market’s] “It’s going to be changeable, and you need to know what your game plan is – before you invest, not after,” Guledge said.

Key terms you need 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 a type of encrypted database distributed on a worldwide network of computer servers. This distributed registry system is difficult to hack because transactions are written to each server in the blockchain.

Cryptoportfolio: Crypto or digital wallet uses blockchain technology to give its user a unique digital identity. This digital signature then becomes part of the blockchain and identifies the property.

Digital asset: This is a type of investment related to blockchain technology, ranging from one of over 20,000 cryptocurrencies to many irreplaceable tokens.

“Inflate your bags yourself”: A term used in the crypto world to refer to the practice of owners of a digital asset to promote the value of that asset in order to attract buyers and increase value.

FOMO: The fear of leaks is the impetus among some investors to jump into the digital asset market such as crypto before they fully understand the risks.

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