Following a very rough 2022 marred by scandals, collapses and losses, the crypto industry is steadily regaining ground in 2023.
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The troubles the industry faced last year had instilled caution and a loss in confidence for many investors; yet, with some assets, such as Bitcoin and Ethereum, bouncing back, and with a fresh cohort of big-name firms filing for spot Bitcoin ETFs, investors are starting to look at the industry again.
Here are a few things experts say investors should know before considering dabbling in the space.
The First Thing To Know: What Not To Invest In
It can be easy to be swayed and convinced by influencers and celebrities pumping various coins on social media. But not all crypto assets are (and fare) the same.
“Crypto outsiders mostly hear about scams and meme coins of dogs and frogs like Dogecoin (DOGE), Shiba Inu (SHIB), and Pep coin (PEPE). Those tokens are excessively volatile and more likely subject to pump-and-dump schemes and market manipulation,” said Thomas Hogan, economist at American Institute for Economic Research. “You could make a bundle, but you’re more likely to lose your shirt. That kind of speculation is more like gambling than investing.”
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As such, Hogan said serious investors should look at major tokens they can hold — or “HODL — for the longer term. Bitcoin is the oldest and most reliable cryptocurrency.
“As the flagship,” he said, “its gains are likely to reflect growth in the industry as a whole, and it is the least threatened by future regulation since the Securities and Exchange Commission (SEC) has already deemed it not to be a security.”
In addition, he noted that investors also have the option of earning returns by investing their tokens on decentralized financial (DeFi) exchanges such as Aave and Uniswap, which are fully transparent and have zero leverage, making them safer than traditional financial intermediaries in many ways.
Crypto Is No Different Than Traditional Investing When It Comes to Potential Losses
“A dirty little secret is the harsh reality that most people lose money when investing in just about anything,” said Brian D. Evans, CEO and…
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