Cryptocurrencies increasingly generate security for many investors because their monetary policy is immutable and already predefined in advance. However, indeed, a large number of cryptocurrencies on the market sometimes makes it more difficult to find those that can be a high-yield investment or that allow us to use them as a source of savings.
For a saver, for example, it would be helpful to buy specific cryptocurrencies that are pretty"resistant" to the artificial depreciation of money. In fact, in some countries, cryptocurrencies are a safe alternative against this phenomenon since there has been no alternative formula until now. Perhaps not enough importance has been given to this fact, but it may make more sense to save with cryptocurrencies if we refer to the data. For example, if you had left your money in the bank in 2003, your purchasing power would have been reduced by approximately 33% today.
Given this scenario, bitcoin has exciting advantages over a well-built portfolio. According to historical data, the evolution of the price of bitcoin has risen by 2.675% over the last eight years, while that of gold has only grown by a modest 64%. If we look at the profitability in relation to the risk, it is measured with the Sortino ratio. The higher this index, the better the profitability of an asset. Over four years, this ratio has been 0.95 for bitcoin and 0.69 for gold.
If we analyze the performance of macro assets that could be rivals with each other, Bitcoin has surpassed both the S&P 500 index and gold in terms of price performance. Bitcoin so far this year has increased its value by about 49.01%, while the stock market (S&P) rose by only 17.8%. However, gold has fallen by approximately -10.35% since the beginning of the year.
On the other hand, it is also essential to consider other cryptocurrencies that have experienced an attractive return during the first three quarters of 2021. The leading decentralized finance platform, Ethereum (ETH), rose by 286.61% from the first to the third quarter. On the other hand, most cryptocurrencies increased by at least three digits, with notable exceptions such as ADA (1044%) and SOL (8800%).
Another handy tip for a cryptocurrency savings plan strategy would be to periodically buy cryptocurrencies, for example, every 15 days or every month. Surely there will be months that we will buy at higher prices, but there will also be other periods that we will buy cheaper. The objective achieved by making these periodic investments is that you’d have purchased cryptocurrencies at an average price by the end of the year without wasting time being constantly aware of the daily quotes of a particular cryptocurrency.
Finally, it would be essential to keep in mind some tips when investing in cryptocurrencies:
Do not invest beyond the possibilities. That is, invest an amount that can allow you to assume losses, which does not affect the general economy of the investor.
Buy on regulated platforms.
Diversify your crypto investments. In this way, if any of them suffer significant losses, they can be minimized.
Keep track of the evolution of the portfolio created and the cryptocurrency markets.
Activate two-factor authentication on all platforms that you can and where it has been invested. Activation of 2FA is essential because it is an extra layer of security that could be added to access funds and protects you from a possible security flaw.
Disclaimer: This is not financial advice.
Please ensure you do your research before investing in crypto. Crypto is a very volatile investment instrument, and Pandar will not be held responsible for any investment decisions.