Like 2024, 2025 will be a lucrative year to invest in cryptocurrency. Trading crypto this year could earn you a huge profit as it is speculated to be the most bullish trend ever. But, considering the high volatility of crypto, is it worth buying? Is it a wise decision or better to invest in something else?
This post explains reasons to invest in cryptocurrency and the risks involved especially for beginners. It also states some best crypto coins to invest in, especially for those with low risk appetite.
So let’s get started…
What is Cryptocurrency
Cryptocurrency, or “crypto,” is a digital or virtual currency that utilizes cryptography for security and operates on decentralized networks based on blockchain technology.
Unlike traditional currencies issued and regulated by the government’s central bank, cryptocurrencies operate on a decentralised system. Transactions are recorded on a distributed ledger known as the blockchain, which ensures transparency, immutability, and security.
There are thousands of cryptocurrencies each with its unique features and purposes. Bitcoin (BTC) is the first and most famous of them all. Other popular crypto coins (or altcoins) include Ethereum, Solana, Litecoin, Cardano, Dogecoin etc.
These digital assets can be used for various purposes, including online purchases, investments, and decentralized finance (DeFi) applications.
To invest in cryptocurrency means acquiring these digital assets with the expectation that their value will increase over time, providing a potential return on investment.
However, it’s essential to understand the risks and benefits associated with cryptocurrency investment before diving in.
6 Reasons to Invest in Cryptocurrency
1. Investment Opportunity:
Cryptocurrency is a type of investment that can generate income and increase in value in future. Thinking of growing wealth, people naturally consider investing in stocks, bonds, real estate and other common investment opportunities.
Right now, investing in crypto is also an avenue to increase your fortune over a long time. It is beginner-friendly, unlike stocks, bonds and real estate.
Likewise, including crypto in the investment portfolio is beneficial for seasoned investors. It can boost your earnings at the end of the year.
Why?
Cryptocurrency price movement is quite different from assets like stocks, bonds or real estate. Investing in crypto rather than focusing only on these assets, helps diversify your investment risk thereby maximizing profit.
For example, At year-end, your investment profit on Adobe stocks could be -2% and Solana is 30%. Because of diversifying your investment, the overall loss is reduced.
2. High Return on Investment(ROI)
Investing in cryptocurrency potentially generates a higher ROI than other forms of investments within a short period.
While stocks, bonds, and real estate are profitable investments, they are no match to popular crypto coins within a short period.
For instance:
Google shares rose by 60% in a year but Ethereum price increased by over 400% in 2021.
If you bought Coti coin in January 2024, your investment would have increased by over 370% by the end of February 2024.
This high return on investment, not possible in other investments, is a major reason people are trading cryptocurrency.
Read: How to trade Cryptocurrency and make profit using EMA
3. Cryptocurrency is the next big thing
Cryptocurrency is new compared to other types of investment. Bitcoin which is the first coin came into being in 2009.
Because the crypto market is young and growing, it is making people wealthy. Those who bought Bitcoin early and HODL (hold) till now are now millionaires.
As of now, there are thousands of crypto coins and tokens and they are already disrupting everything, especially the financial market.
Interestingly, cryptocurrency trading is growing as countries relax their restriction on it. Hence, investing in some crypto coins at the early stage could earn huge profits in a few years; even more than 10 times your initial capital.
4. Cryptocurrency is multi-purpose
Crypto coins can do many things. Being a digital currency does not mean it is a fantasy with no usefulness.
To know the purpose of a specific coin, read its Whitepaper. It contains vital information about the coin and the company/creators.
Like a stock, owning a crypto coin shows you have a measure of right in the decision-making of the company.
Crypto is like money; a digital currency. This means you can spend, sell, transfer, give, convert or hold long-term your crypto coins.
Various companies like Microsoft, Tesla and Starbucks are already accepting Bitcoin as a means of payment to attract people.
5. Secured
Cryptocurrency is backed by blockchain technology which offers greater security than what the traditional market offers.
Each transaction is verified and can be traced. However, because crypto is safe does not mean you should not be security conscious.
Like a bank account, it is also your responsibility to secure your crypto coins. For instance, use a strong password, avoid suspicious sites and transfer crypto to a cold wallet if in doubt.
6. Flexibility and Ease
Crypto trading is available 24/7. Unlike stock markets that close on Friday, you can buy or sell crypto coins any day and time.
Also, investing in crypto is easy. Simply open an account with a crypto exchanger like Binance or broker online and proceed to buy it in a few minutes. Then, leave it in your wallet and watch it grow in value over time.
For example, you can open a Binance account at 1 am, fund it and buy Ethereum coin in the same hour.
Cons of Investing in Cryptocurrency
While investing in cryptocurrency presents numerous potential benefits, it’s crucial to acknowledge and understand the associated risks before committing funds to this asset class.
1. High Volatility
Cryptocurrency markets are highly volatile, with prices changing rapidly within a short period.
While this volatility can present opportunities for substantial gains, it also exposes investors to the risk of substantial losses.
For example:
- On 21/2/2024, JasmyCoin increased by 56.73% but fell by 32.22% the next day
- Ethereum rose by 5.38% on 20/2/2024 but reduced by 4.95% by the next day.
- Dogecoin rose to 0.7375 in 2021 and fell to 0.0491 in 2022.
The price swing is common in the crypto world. Popular coins like Bitcoin and Ethereum are less volatile, but many altcoins are highly volatile for investment.
This is why investing in most cryptocurrencies is unsuitable for low-risk takers. Unless you stick with popular coins or stablecoins
2. Regulatory Issue:
The regulatory landscape surrounding cryptocurrencies is constantly evolving and varies significantly from one jurisdiction to another.
Some countries banned cryptocurrency trading or enforced tighter restrictions on exchanges. This negativity affects the cryptocurrency market, especially in terms of depositing money to one’s account.
To avoid country restrictions, crypto exchangers and brokers usually recommend Peer-to-Peer (P2P) trading to deposit and withdraw money.
The regulatory issue impacts crypto market sentiment. Many people are afraid of losing money to an investment not fully supported by the government. This hinders the adoption and mainstream acceptance of cryptocurrencies.
3. Security Risks:
Cryptocurrency investments are susceptible to security breaches, hacking attacks, and fraud.
Just like thieves attack banks to steal money, crypto exchanges and wallets are prime targets for cybercriminals.
According to a report, close to $2 billion worth of crypto coins was stolen in 2023.
Instances of account hacks, where millions of dollars worth of cryptocurrencies are stolen, continue to occur, resulting in significant losses for investors.
4. Lack of Consumer Protection:
Trading in cryptocurrency is at consumers’ risk. Unlike banking transactions which can be reversed, crypto is not. Also, consumers cannot be compensated in the event of losing the fund.
Additionally, the decentralized nature of many cryptocurrencies means there is no central authority responsible for ensuring consumer protection or resolving disputes.
Crypto platforms always caution individuals before trading in cryptocurrency. To proceed, you must agree that you can lose all money without compensation.
For example, to trade an FTX Token, Binance requires you to agree to the terms of losing money without compensation.
5. Market Manipulation:
The cryptocurrency market is relatively young and less regulated than traditional financial markets. This makes it prone to price manipulation schemes.
Some less-traded crypto coins experience pump-and-dump schemes. Their prices are artificially inflated by coordinated buying to attract unsuspecting traders before being sold off at a profit.
Best Crypto Coins For Beginners in 2024
As we enter the bullish trend, most crypto coins’ prices are rising rapidly. However, selecting the best crypto coins to invest in 2024 is about balancing the risk tolerance, especially for beginners.
1. Bitcoin (BTC):
Bitcoin is one of the best cryptocurrency investments especially for people with low risk tolerance. As the first crypto, Its widespread acceptance in terms of payment of goods and services continues to increase its value.
After dropping to around $15,000 in November 2022, Bitcoin has been rising steadily. Currently, at around $51,000, Bitcoin is predicted to surpass its 69,000 mark this year.
Bitcoin halving happening this year will further increase its price. Historically, this event, meant to limit Bitcoin supply, has led to a huge surge in Bitcoin price which is set to occur this year again.
Compared to other altcoins, investing in Bitcoin will not generate the highest ROI. However, its low volatility to other coins gives investors peace of mind and good returns.
2. Ethereum (ETH):
Ethereum is a leading smart contract platform that enables developers to build decentralized applications (DApps) and execute smart contracts.
Unlike Bitcoin, Ethereum is versatile. Ether, is used for transaction fees and many tokens are built on the Ethereum ecosystem
During the bearish trend, Ethereum reached $880 in June 2022. Currently at around $3000, Ethereum will beat its previous record of $4800.
Investing in Ethereum will give a better ROI than Bitcoin this year. It is also less volatile than other crypto coins which makes it suitable for low-risk appetite investors.
3. Solana (SOL):
Solana, known for its fast transaction speeds and low fees, is another best crypto coin to invest in 2024.
SOL reached $259 in November 2021 but dipped to $8 in December 2022. Solana is currently at around $100 and should surpass its previous milestone during this bullish trend.
Therefore, buying Solana coin now is one of the best investments that could more than double your capital this year.
4. Cardano (ADA):
Cardano is an open-source Proof-of-Stake (POS) blockchain platform focused on scalability, interoperability, and sustainability.
Cardano’s lowest price was $0.017 in 2020, reached its highest price of $3 in 2021 before and fell to $0.2 in 2023. Currently, at around 0.6, Cardano could go beyond its previous highest price in a year.
No doubt, Cardano is one of the best investments in 2024 that will earn you better returns than stocks.
5. Polkadot (DOT):
Polkadot is a multi-chain blockchain platform that enables interoperability between different blockchains.
Polkadot’s all-time high price was $55 in 2021 and slipped to $3.5 in 2023 during the bearish trend.
Currently, at around $7 in 2024, Polkadot is one of the best crypto coins to invest in this year as it tends to rise steadily.
6. Chainlink (LINK):
Chainlink is a decentralized oracle network that provides real-world data to smart contracts on the blockchain.
ChainLink’s all-time high price was $52 in 2021 and slipped to $4.7 in 2023 during the bearish season.
Currently, at around $18 in 2024, ChainLink is one of the best crypto coins to invest in this year and earn a good profit.
7. Uniswap (UNI):
Uniswap is a decentralized exchange (DEX) protocol built on Ethereum that facilitates automated token swaps and liquidity provision. Its native token, UNI, is used for governance and incentivizing liquidity providers.
ChainLink’s all-time high price was $44 in 2021 and slipped to $3 in 2022 during the bearish season.
Currently, at around $10 in 2024, ChainLink is one of the best crypto coins to invest in this year with good ROI.
Note: The list of best cryptocurrencies is inexhaustible. You can research for more crypto to invest in. But let your risk level guide you to avoid losing money.
Tips to Invest in cryptocurrency
No doubt, investing in cryptocurrency is fantastic, however, there are pitfalls. Here are some practical cryptocurrency investment tips:
- Conduct Research: There are over 5000 crypto coins but not all are investment worthy. Research a digital coin before investing in it. To streamline your quest, you can limit your investment within the top 20 crypto coins by market cap.
- Learn Cryptocurrency: Understanding cryptocurrency trading including technical indicators will enhance your profits over time. You will know the best time to buy a crypto and sell it before the price drops.
- Be Security Conscious: Use available security measures to safeguard your crypto coins. Stay away from suspicious airdrops requesting your ID and password. Use a strong password, and 2-factor authentication to lock your crypto app. Hackers always target crypto exchangers and users so, guard your funds.
- Invest Wisely: The number one investment principle is this: Invest the amount you can afford to lose. Do not invest in cryptocurrency more than you can bear because anything can happen. Know your risk level – low, medium or high-risk taker – and stick with it to avoid shock.
FAQs on investing in cryptocurrency
Conclusion
Investing in cryptocurrency can offer exciting opportunities for investors seeking alternative assets with the potential for high returns and exposure to innovative technology. Throughout this guide, we’ve explored the fundamentals of cryptocurrency investment, reasons to consider investing, associated risks, and practical tips for navigating the market successfully.
I hope you find this information helpful.
Lastly, if any, do leave your question or opinion in the comment below or Facebook page
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