We Asked an Expert If Cryptocurrency Is Still Worth Our Time and Energy in 2021

To be quite candid, I continue to be in severe need of cryptocurrency tips. To me, the world has always appeared strange and mystical.

Sure, it's constantly making news for people making or losing money, and it's still going strong despite widespread belief that it was a fad. However, what is crypto and is it still profitable in 2021, or is it time to abandon it and move on?

We spoke with Josh Gilbert, a Market Analyst at eToro, the premier social trading platform, to get some answers.

PEDESTRIAN.TV: What is cryptocurrency, for those of us still in the dark?

Josh Gilbert: A cryptocurrency is a decentralised digital or virtual currency that is not governed by a central authority or government.

One of the early charms of cryptocurrencies was the ability to transfer big sums of money anonymously and without the intervention of governments or institutions.

The majority of cryptocurrencies are built on blockchain technology, which is a distributed ledger (or, to put it another way, it's the database that holds the data). In the case of Bitcoin, the blockchain is utilised, which ensures that no single individual or entity retains control. Rather than that, all users control the system jointly.

Why would someone invest in cryptocurrencies rather than traditional stocks?

JG: The appeal of cryptoassets [the umbrella word for all forms of cryptocurrencies or digital assets] to investors is their high returns and lack of correlation with other assets.

While investing in cryptocurrency carries a high level of risk, it has historically yielded tremendous returns. Bitcoin has returned 34% year to far, but other cryptocurrencies have returned even more – for example, Ethereum has returned 209%.

Additionally, cryptoassets are utilised to diversify portfolios. I often warn investors that despite the great returns, they should conduct research, understand the investments they are making, and invest no more than they can afford to lose.

PTV: Is investing in cryptocurrency always worthwhile?

JG: This is completely dependent on the investor's time horizon and investment objectives. Before investing, you should establish objectives and develop a strategy. It's easy to lose sight of these objectives during periods of asset appreciation, but if you invested with a certain return in mind, make an effort to adhere to it.

In other situations, investors seek to purchase Bitcoin as a store of value because they predict that demand will exceed supply in 20 years, resulting in significantly higher prices. On the other hand, some investors with a shorter time horizon are hoping to profit from the volatility.

Cryptoassets, in my opinion, are a long-term investment with an expected increase in use over the next decade.

What aspects should you consider while making an investment decision?

JG: Risk is the primary consideration when investing in any asset, but it is an even more critical consideration when investing in cryptocurrency due to the asset's volatility.

Since 2009, Bitcoin has fallen by 50% fifteen times, demonstrating the asset's volatility. Conduct research to develop a better grasp of the asset's lifetime and the impact of volatility on your investment portfolio.

Recognise your timeline and, as discussed previously, establish a specific objective. Consider the situation in which you require immediate access to liquid funds from your portfolio. In such situation, investing in the significant market volatility associated with cryptocurrency may not be the greatest decision.

Investors should consider dollar-cost averaging in the vast majority of circumstances. This method can be an effective way to avoid the near-impossible effort of attempting to 'timing the market,' while also providing a lower-risk investment plan for a high-risk asset.

Naturally, you'll need a sense of what you believe will happen to cryptocurrency in the future. Therefore, stay informed on current events, particularly what industry experts have to say. Consume as much information as possible to provide yourself with the necessary tools to make sound financial decisions.

Support us!