Three things new crypto investors need to know

Three things new crypto investors need to know

It’s hard to escape the cryptocurrency hype, from Elon Musk‘s “Most Likely Cryptocurrency Is The Earth’s Future Currency” to headlines like “Bitcoin Will Reach $ 100,000 Next Year” in 2023 “.

Either that happens or crypto gets worse, one thing is clear: A lot is happening around crypto: Triple A crypto payment gateway is expected to arrive This year there are over 300 million crypto users worldwide and over 18,000 companies accepting crypto payments.

For their part, many colleges and universities – such as Stanford, MIT, Duke, and UPenn – have worked to help students keep pace with this fast-paced world by constantly adding electronic money courses to their curriculum.

This is what Professor Christine A. Parlor, who has taught investment courses for many years and recently started introducing cryptocurrencies into the curriculum at UC Berkeley’s Haas School of Business, shares what it is like. New Crypto Investors Should Know:

Don’t assume you are investing in a safe space

We are used to investing in a safe environment. Various supervisory authorities ensure the transparency of the traditional stock market and have specific regulations for the trading process. This regulatory system is currently not fully applicable to cryptocurrencies on both the corporate and the stock exchange side. Participants should be aware of this.

As MarketWatch recently reported, while U.S. regulators remain some pushes for new regulations on cryptocurrencies in 2021, uncertainties remain as the market continues to grow. Think about whether crypto lending products are securities, how stably cryptocurrencies and decentralized finances should be regulated, and whether or not the SEC will soon approve an ETF via Bitcoin.

So be careful.

Investors should exercise extreme caution and ensure that they are fully prepared.

Experts have given different recommendations on the ratio of cryptocurrencies in the investment-egg basket. Ross Gerber, CEO of Gerber Kawasaki Wealth and Investment Management says: “We recommend everyone to invest 1% to 5% of their portfolio in cryptocurrencies. It carries very high risk, so it should be a long-term investment and people need to consider it a small-cap tech stock.“.

Financial planner Brad Ledwith says you should look at it like a gambler who walks into a casino. “Lots of people walk into the casino planning how much they’re going to lose. Are you ready to lose 1-2% of your portfolio? If so, this could be a good assignment, but it all depends on your gaming risk tolerance.n“.

Don’t buy hype about every crypto innovation that comes out

It is important to understand how these particular innovations add value. Innovation just to innovate is not effective.

Many business models are new and untested and for this reason some crypto-supported projects will fail.

However, that doesn’t mean there isn’t going to be great innovation, you just need to know where to look. There are tremendous benefits to being able to identify inefficiencies and build a better system.