Can You Build Wealth by Trading Bitcoin?
As an asset, cryptocurrency is recognized as a highly volatile holding. Prices change frequently, with the changes often amounting to thousands of dollars from one day to the next. And while some digital currencies, such as BTC, are more likely to be stable compared to the altcoins, you’ll still need to thoroughly analyze a Bitcoin price chart before commencing any transaction. This is to guard the safety of your capital and to ensure you’re less likely to make unfavorable trades. For these reasons, most investors have been skeptical about trying digital assets. If something seems more likely to result in losses rather than revenue, it’s understandable that you wouldn’t want to add it to your portfolio, right?
It might seem like the most logical assertion, but the reality is a little more complex than that. In fact, research points out that investors in digital coins have the possibility to amass significant amounts of wealth over the long term. In fact, the primary motivator to purchase crypto is the idea that it can be used as a means to grow wealth. For many traders, it shows the same value as stocks in helping store value over time.
Estimates show that between 2020 and 2021, 13% of Americans purchased cryptocurrencies. These figures show that people are becoming increasingly more engaged in the cyber money market. However, with the volatility levels not going away anytime soon, you might wonder exactly how well crypto would fare as a possible store of value. Let’s examine the facts.
Expanding Your Portfolio
One of the leading uses for which traders approach crypto is as a means to diversify their portfolios. When all your assets are roughly similar to one another, you leave your finances more vulnerable. If prices or markets crash entirely, you are eligible to lose most of what you have gained. This depressing scenario can be avoided by owning holdings in different markets. This way, even if some markets crash, you have something else to rely on.
The best way to ensure everything works according to plan is to devise a financial strategy and stick to it. Plenty of investors think of crypto as part of their retirement plan. If you are of the same mind, you should focus on how you can include crypto alongside the savings you’ve amassed so far. This is just one of the ways in which Bitcoin can become an integral part of your long-term portfolio and ventures.
But there’s a catch. In order to ensure that you can have a successful trading career, you need to do your research and become a tech-savvy investor. This road can be a little challenging, particularly if you have no previous knowledge of the subject or if you’re not proficient in computer science. However, it’s essential to become better at what you do and ensure you can perform successful trades.
Control Your Emotions
It can seem like a no-brainer, but it’s important to remember nonetheless. If you want to be successful in crypto trading, it’s essential that you avoid making impulsive and emotionally-based decisions. They’re the ones most likely to cause you to lose money, a counterproductive thing when you’re looking to amass revenue. Nonetheless, this is easier said than done.
Over the past few years, Bitcoin has risen to tremendous new heights, reaching popularity levels rarely seen in any asset before it. This has resulted in a lot of hype created around it, with many basing their entire trading strategy on the actions of their fellow traders. This is a mistake mainly due to the fact that everyone has different purchasing power levels, so a failed investment that can be easily brushed off for someone might be a complete disaster for someone else.
It can be tough to remain detached. During the current crypto winter, investors have seen their returns drop significantly. Psychologically speaking, it is incredibly challenging to witness this and just stand by. For this reason, you should distance yourself as much as possible. Stay cool-headed, and you are more likely to make objective decisions that take you further.
Check the prices sparingly. Although it’s essential to be aware of the values before buying or selling, as well as estimating how the prices are likely to evolve over the near future, checking prices obsessively is more likely to cause you to become disheartened rather than objectively aware and prepared.
Diverse Investors
Economic inequality is still very much a problem in the present, with some demographics being, on average, more disadvantaged than others. Generally speaking, people of color and women have been more likely to be underprivileged. These groups have displayed a keen interest in crypto, with women making up 40% of crypto traders compared to 38% that invest in traditional stocks. For people of color, the gap between the two is even further apart, with 44% of investors having crypto in their portfolio, compared to 35% that trade stocks. Bitcoin is also appealing to individuals with lower incomes, with those making less than $60,000 per year making up 35% of crypto traders.
The demographic most likely to become involved with digital money is younger, with the average age somewhere around 38. It’s no surprise, given the fact that crypto requires a significant amount of computer skills, which are more likely to be better developed in the younger population. These characteristics make Bitcoin a potential candidate for breaking down the barriers that have traditionally been associated with trading ventures. Underrepresented groups being offered a voice in the market and having the possibility to build their wealth levels is a big step in the right direction for both individual investors and the community as a whole.
Building wealth via the use of cryptocurrencies isn’t easy. It’s definitely not something that can realistically happen overnight, so if you expect digital money to be a sort of get-rich-quick scheme, you’re bound to be disappointed. Building revenue takes time, but if you’re patient and attentive to changes in the market, you’re bound to see desirable results sooner rather than later.
This article has been published in accordance with Socialnomics’ disclosure policy.
