Buy Bitcoin on the downside? 3 things the smartest investors know about crypto

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Bitcoin (CRYPTO: BTC) is the giant of the cryptocurrency world. He is the first player and the greatest. You can use it to make payments at over 15,000 businesses worldwide. In fact, two countries – El Salvador and the Central African Republic – even recognize it as legal tender. Investors flocked to Bitcoin last year as the entire cryptocurrency market surpassed $3 trillion in market value.

However, this year’s economic difficulties have pushed investors towards the safest assets. And that means cryptocurrencies have suffered. You may be considering buying Bitcoin on the decline right now, but before you do, check out these three things the smartest investors know about crypto.

1. Today’s Economic Troubles Don’t Change Crypto History

Rising inflation and other economic problems hurt personal portfolios and corporate earnings. The current context has also weighed on the demand for cryptocurrency.

In these times, investors are turning away from risky assets. Why is crypto risky? Because it’s rather new. And we don’t know exactly what the landscape will look like in a few years.

But the current economic situation does not change the ongoing development in the crypto world. For example, developers continue to add projects on blockchains like Ethereum (CRYPTO: ETH). And people continue to pay with Bitcoin or use it to store value.

These platforms may not be as popular as investments right now, but the economic backdrop isn’t hurting their use cases or their potential to redefine the way business is done. So, once these external issues lift, cryptocurrencies could rebound quite quickly.

2. Regulation may be on the way, but that’s not necessarily bad

The idea of ​​cryptocurrency regulation may make some investors cringe. The fear is that it could destroy the freedom promised by the crypto market.

And the regulations may be getting closer. This fall, the White House released a framework for the responsible development of digital assets. The document includes various points, including potential efforts to foster market stability and ideas for combating illegal activity.

Of course, if the government goes too far in certain areas, possible regulation could harm the demand for cryptocurrency. But it is important to remember that various experts will likely be involved in the discussions. And future regulation may not result in extreme or destructive decisions.

Instead, regulation can actually set guidelines that reassure investors who have been hesitant to invest in cryptocurrency. A safer market does not necessarily mean a market with less freedom or opportunities for earnings. Potential regulation can therefore be positive and attract more investors to the market.

3. There is a way to safely invest in crypto right now

As mentioned, cryptocurrency is among the riskiest assets. But that doesn’t mean a wallet that includes crypto is high risk — and one that doesn’t is a safe bet. If you want to enter this innovative market while prices are falling, there is a way to do it safely.

First of all, you can consider the oldest and strongest players: Bitcoin and Ethereum. They have each lost more than 65% this year. But since their debut, they have climbed over 5,000% and 38,000% respectively. And as we can see in the chart, they’ve been through tough times in the past – and bounced back.

Bitcoin Price Data by YCharts

You have the option of buying fractional shares of these players. So you don’t have to make a big investment. To safely invest in these or any other crypto readers, don’t invest more than you can afford to lose.

Also, balance your holdings with other assets considered safer – for example, stocks known for their dividend growth or stocks of consumer staples or pharmaceutical companies that have strong earnings records.

This type of strategy will allow you to enter a market that could bring huge rewards in the long run. In the meantime, you won’t lose any sleep.

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Adria Cimino holds positions in Ethereum. The Motley Fool has positions and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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