The year 2022 did not go as many investors would have anticipated. Not only did the ecosystem experience massive price plunges, but there were also several exploits and firm crashes. In all honesty— this was one of the most challenging years since the invention of crypto. Before we go further, let’s go back in time to 2021. You would agree that 2021 was one of the most profitable years for the crypto sector. Besides the fact that Bitcoin hit $69,000, several meme projects turned many people into overnight millionaires.
Unfortunately, that has not been the case since 2022 began, and as it runs to a close. This year alone, cryptos like Ethereum lost their midas touch and fell from $4,000 to trade below $1,000. What about Solana? It has been a journey from a unique project to battling investors’ exits. More glaring was that projects like LUNA crashed, and users suffered the consequences of FTX’s mismanagement. All said and done, that is over, and nothing can change it. So, looking ahead, what does 2023 hold for the faithful crypto community? This article will cut across everything you need to consider before you activate the buy button for cryptocurrencies in 2023.
Bitcoin? Yes! Bitcoin. Of course, you might wonder why the number one cryptocurrency in market capitalization is so important. Let’s be transparent— if Bitcoin goes down today, trust that the crypto industry will be proclaimed non-existent. So, before you think about accumulating altcoins, shitcoins, or any other protocol, take a good look at Bitcoin. What is more, make sure you trade it properly. If this sounds peculiar to you, the best starting point is to stay away from the attention-grabbing flashy platforms that promise you tons of Bitcoins. Bitcoin Evolution is among the proven trading websites that attracted lots of traders this past year.
But now back to the mighty history of Bitcoin. If you look at history, anytime Bitcoin rallies, it takes almost the whole market with it. In contrast, when the price nukes, many other cryptocurrencies suffer. This is one of the reasons that it is called the “king coin.” So, to avoid making bad investments, you should assess Bitcoin’s trend and momentum. This may help you make relatively good decisions. However, you should note that the Bitcoin price guarantees nothing on your investment. Although it offers a hedge, the market volatility could still affect other coin reactions to its trend.
Decentralised Exchanges and Tokens
As someone who has experienced the fall of the market in 2022, you may be making a grave mistake if you do not consider Decentralised Exchanges (DEXes) in 2023. You don’t have to go too far before seeing the apparent reasons. In 2022, the “almighty” FTX exchange collapsed. This crash resulted from centralization and the executives using customer funds for outright gambling with its sister trading company, Alameda. So, think about it. Would you still put all your funds into a centralised exchange despite what has happened? Other exchanges like Binance, and Crypto.com had tried gaining back trust with the proof-of reserves. However, it might not be enough as firms like Bybit and Coinbase laid off many employees.
To tackle this, consider decentralised projects like Uniswap, or the entire DeFi ecosystem. The signs are already there, especially as the native token of Trust Wallet (TWT) surged as high as 130% a few weeks after many investors moved their assets off centralised exchanges. Because of this, experts have suggested that it would be difficult to ignore these advocates of decentralisation and their tokens. There is, however, one thing that you need to know. There is no guarantee that the bull market will return in 2023. But in case it does, there are some aspects that you may need to look at.
If there is one mistake that many investors and traders make, it is getting emotionally attached to a project. This gets so bad that they make it their sole duty to only invest in the coin or related projects. As someone who wants to excel with crypto investing or trading, consider this a bad decision. Know this, no matter how exceptional a project can be; it is not immune to collapse. So, you do not want to put all your eggs in one basket. The answer? Diversification!
So, if you have $10,000 to invest, ensure that you distribute across several tokens and coins. Of course, you do not expect that we tutor you on what to do, as this article is purely information. However, if you are at a crossroads, you can talk to financial experts or do your own research before investing.
What Are the Risks?
This is one part that no one should skip. The sad reality is that many do not even consider it important. But if you have fallen victim to crypto crashes in 2022 or your holdings are in the drain, please consider risk management. This is important because knowing the potential risks of any cryptocurrency puts you at an advantage in making a better decision.
So, in all you do, evaluate the potential positives and negatives of investing in a project. Doing this lets you know if you should pump more funds into a tread project carefully.
Be In for the Long Term
As mentioned earlier, the crypto market reeks of uncertainties. In the same vein, you cannot say that this is a particular time that the bear market will end. Due to this, you can do yourself the favour of investing money you do not need in the short term. Except you are a day trader, this should be your strategy. In simple terms— be in it for the long term. For example, those that invested in Bitcoin when it was $300. Even with the drop to $17,000, these investors would still be in profit irrespective of the price drop. However, this is not to say that yours will take as long as five or six years. But being patient is one of the major perks of being in any financial market.
You would agree that cryptocurrencies can be highly volatile. However, if you still want to keep your investment in digital assets without extreme volatility, use stablecoins. Stablecoins are assets in the crypto market which are mostly pegged to the United States dollar. So, in cases where Bitcoin or Ethereum dips 56%, stablecoins like USDT or BUSD hardly suffer the same fate.
Well, you may be wondering how this helps. It is simple. Instead of being an onlooker when the crypto market suffers, having some assets in stablecoins means you will be significantly exempted.
The Bottom Line
Finally, you should know that this article should not be a yardstick for your decisions. Everything mentioned is a result of the recent happening and what the consequences may likely be. There is also the possibility of increased regulation. This is because of the numerous misappropriations that rocked the sector in recent times.
Nevertheless, you can also consider learning more about blockchain technology. If all you want from the crypto market is profits, you may be doing yourself a great disservice. More importantly, ensure that you do your own research and invest only money you can afford to lose.