The question remains: Is cryptocurrency a good investment in 2023?

 Cryptocurrency Market Overview

• Current State of the Cryptocurrency Market
• Key Trends and Developments in 2023

Cryptocurrencies have significantly outperformed various asset classes, such as stocks, gold, and real estate, in recent years. The question remains: Is cryptocurrency a good investment in 2023?

Delving into the investment thesis of Bitcoin and other digital assets, this comprehensive guide explores the potential for upside gains, as well as the accompanying risks and the necessary steps to embark on this investment journey.

From our standpoint, cryptocurrencies represent a robust choice for long-term investment. While they exhibit volatility, cryptocurrencies have outshined most financial markets in the past years. For instance, Bitcoin, previously valued at a mere $1,000 in 2017, has surged to surpass $68,000. Other cryptocurrencies, such as Ethereum, BNB, and Solana, have witnessed even more substantial gains.

It is crucial for investors to carefully consider the risks associated with purchasing cryptocurrencies, as not all projects achieve success. Moreover, investors should craft a well-thought-out investment strategy and maintain a diversified portfolio comprising various asset classes, enabling effective risk management.

Factors Influencing Cryptocurrency Investments

• Regulatory Changes and Government Policies
• Technological Advancements and Innovation

Furthermore, investors must conduct thorough research when selecting which cryptocurrencies to invest in. This prudent approach ensures that investors enter the market with a detailed understanding of the opportunities and risks at hand.

To answer the fundamental question of whether cryptocurrency constitutes a good investment, let's start with the basics. Bitcoin, launched in 2009, serves as the original cryptocurrency and boasts the largest market capitalization. During the past bull market, Bitcoin topped $68,000, with an overall valuation of almost $1.2 trillion.

However, numerous alternative coins, referred to as altcoins, have emerged since their introduction to the market. Similar to the stock market, this proliferation provides investors with a vast array of options to choose from. Comparable to Bitcoin, many cryptocurrencies have witnessed significant returns in recent years. For instance, Ethereum, initially valued at less than $1 upon its launch in 2015, has soared to all-time highs of nearly $5,000.

Cryptocurrencies function as digital assets, devoid of a tangible form like traditional money. Some cryptocurrencies operate in a decentralized manner, meaning that no single entity or person possesses control over the network. Consequently, holders of decentralized cryptocurrencies, such as Bitcoin, enjoy complete autonomy over their funds.

Risks Associated with Cryptocurrency Investments

• Volatility and Price Fluctuations
• Security Concerns and Scams

Furthermore, cryptocurrencies operate through blockchain networks, facilitating peer-to-peer transactions while eliminating the need for intermediaries. Although certain cryptocurrencies utilize their own proprietary blockchains, such as Bitcoin, Ethereum, Solana, and BNB, the majority of cryptocurrencies function on top of existing blockchains.

For instance, there exist numerous cryptocurrencies based on Ethereum, which are commonly referred to as ERC20 tokens. Certain cryptocurrencies offer practical applications in the real world. Take Ethereum, for example, which enables developers to initiate smart contract agreements. Financial institutions employ XRP for cross-border payments, while BNB serves the purpose of paying commissions on the Binance exchange.

That being said, it is essential to approach all cryptocurrencies as speculative assets. Not only are cryptocurrencies highly volatile, but their behavior is also unpredictable. Additionally, some cryptocurrencies lack definitive use cases or utility, instead being created purely for speculative reasons.

The Crypto Investment Markets
The majority of individuals purchase cryptocurrencies as an investment, much like stocks. Cryptocurrency prices fluctuate based on supply and demand. When more individuals acquire a particular cryptocurrency, its price tends to rise, and vice versa when people sell.

Consequently, investors face the possibility of making or losing money, necessitating a careful consideration of the associated risks. The investment process itself closely resembles that of other assets. Initially, investors must decide which cryptocurrency to purchase. Subsequently, they can open an account with a regulated cryptocurrency exchange, deposit funds, and proceed to acquire their preferred digital asset.

Regulation plays a crucial role in the selection of the best cryptocurrency exchanges. For this reason, many beginners opt for eToro when purchasing Bitcoin. Notably, eToro adheres to stringent regulations and facilitates payments through debit/credit cards and e-wallets. More details on this will be provided later. Once a cryptocurrency is acquired, investors hope for its value to appreciate. When that happens, an investor can sell their holdings and earn a profit. Cryptocurrencies can be converted back into traditional fiat currencies at any given time.

To illustrate whether investing in cryptocurrencies is worthwhile, consider the following real-world example:

• Suppose an investor purchases $1,000 worth of Bitcoin.
• At the time of the investment, Bitcoin is valued at $20,000.
• The investor retains their Bitcoin investment for two years, during which its value increases to $60,000.
• Consequently, the initial investment of $1,000 is now valued at $3,000.
• The investor proceeds to sell their Bitcoin holdings, converting them back into fiat currency and withdrawing the funds to their bank account.

As demonstrated by the example above, investing in Bitcoin operates similarly to investing in stocks.

For more in-depth information on the investment process, please refer to our comprehensive guide on purchasing Bitcoin with a credit card.

Do You Need to Buy a Full Bitcoin?
There is often a misconception that Bitcoin can only be purchased in its entirety. Fortunately, this is not the case. On the contrary, Bitcoin can be divided into 100 million units called 'Satoshis.' In essence, Bitcoin and Satoshis are analogous to dollars and cents respectively. Consequently, investors can acquire any desired quantity of Bitcoin. As a result, beginners have the flexibility to start with smaller amounts. For instance, at eToro, investors can buy as little as $10 worth of Bitcoin.

Why Cryptocurrency Can be a Good Investment
In this section, we will thoroughly examine the question of whether cryptocurrency represents a worthwhile investment in 2023. Our analysis will assess the investment thesis of Bitcoin and other cryptocurrencies to aid beginners in making informed decisions. Then, we will delve into some of the key risks associated with cryptocurrency investments.

Potential for Large Gains
Although cryptocurrencies exhibit volatility as an asset class, they possess the potential to generate substantial returns. Historical data indicates that, when compared to the stock market, cryptocurrencies have yielded significantly higher performance. However, it is important to note that this outperformance has occurred over a relatively short time span.

Bitcoin serves as a prime example of this phenomenon. In 2011, its value was less than $0.10, but it has since reached all-time highs of over $68,000. Consequently, since 2011, Bitcoin has appreciated by nearly 68 million percent. Similarly, Ethereum was valued at under $3 in 2016. Nevertheless, it has experienced significant growth, reaching peaks of nearly $5,000. This translates to a remarkable increase of over 166,000%.

There are numerous instances of cryptocurrencies that have yielded substantial returns. However, the primary point is that cryptocurrencies cater to investors seeking higher gains than what the stock market can provide. Over the past five years, for instance, the S&P 500 has risen by nearly 55%.

During the same period, Bitcoin has experienced an increase of almost 325%. Now, let's consider an investor who purchased BNB five years ago. By doing so, their portfolio would have skyrocketed by over 2,100%.

In the current bear market, cheaper prices are available for Bitcoin and other cryptocurrencies. Similar to stocks, cryptocurrencies undergo market cycles characterized by prolonged periods of price surges (bull market) and declines (bear market). Currently, cryptocurrencies are in a bear market.

So, what does this imply for investors? Well, those contemplating the purchase of cryptocurrencies at present will enter the market at a lower price point. This is because most cryptocurrencies are trading well below their previous all-time highs. For example, Bitcoin is currently trading at just under $30,000, whereas during the peak of the prior bull market, it surpassed $68,000. In theory, this suggests that Bitcoin is obtainable at a 55% discount.

Some of the top altcoins are currently offering even larger markdowns. Take Solana, for instance, which reached $260 during the last bull cycle but is currently trading under $25—a discount of over 90%. Similarly, Ethereum was priced at just under $5,000 in late 2021, but it is now available at around $1,800—a discount of 65%.

The greatest advantage of investing during a bear market is that investors can target a higher upside due to securing a significantly lower entry price.

Many cryptocurrencies attract substantial liquidity levels, which is one of the most crucial metrics to consider when selecting a cryptocurrency to purchase. In simple terms, if a cryptocurrency garners abundant liquidity, it becomes easier to enter and exit the market.

For instance, Bitcoin presently boasts a market capitalization exceeding $500 billion, with nearly $17 billion worth of Bitcoin being traded in the past 24 hours. This means that there will always be individuals willing to sell their Bitcoin to a buyer, while others will be eager to buy Bitcoin from a seller. Moreover, smooth market conditions ensure that both buyers and sellers obtain a fair market price.

This phenomenon also holds true for other large-cap cryptocurrencies like Ethereum, BNB, Cardano, Solana, Dogecoin, and XRP. Nevertheless, the majority of cryptocurrencies possess small market capitalizations and experience low trading volumes, which can lead to liquidity challenges, making it more arduous to obtain a fair price when entering or exiting the market.

Cryptocurrency Investment Strategies

• Long-Term vs. Short-Term Investing
• Choosing the Right Cryptocurrencies

However, unless a substantial amount of money is being invested, buying and selling small-cap cryptocurrencies can still make sense. Furthermore, small-cap cryptocurrencies offer a much higher upside potential, as they have ample room to grow.

Certain cryptocurrencies feature decentralized frameworks. As mentioned earlier, this indicates that no entity controls the network.

Bitcoin is the supreme cryptocurrency when it comes to decentralization. Its network operates on unchangeable code, which offers numerous benefits to investors. For instance, individuals who hold Bitcoin in a self-custody wallet completely own their funds. As long as the wallet remains secure, only the investor can access their Bitcoin.

In contrast, traditional money is held in bank accounts that are controlled by financial institutions, enabling them to freeze accounts or blockchain transactions at any time. Bitcoin transactions, on the other hand, cannot be obstructed due to its decentralized system, and self-custody wallets cannot be frozen.

That being said, investors should bear in mind that not all cryptocurrencies are decentralized. Although this isn't necessarily a drawback, it remains an important factor to consider.

Now, what exactly is a self-custody wallet? 

There are two primary types of wallets that permit investors to store their cryptocurrencies. First, there are custodial wallets, which resemble bank accounts as they are secured and managed by third parties. Second, there are self-custody wallets, also known as non-custodial wallets. These wallets are exclusively controlled by the owner, meaning that nobody else has access to the cryptocurrencies.

Furthermore, let's consider the potential risks involved in investing in cryptocurrencies. As with all investment opportunities, it is crucial to consider the risks before purchasing cryptocurrencies.

One particular risk is volatility. Put simply, the cryptocurrency markets often experience significant price swings, especially with small-cap cryptocurrencies.

For instance, according to CoinMarketCap data, within the past seven days of trading, Sei, Quiztok, and CyberConnect have witnessed increases of 2,325%, 259%, and 134%, respectively. Conversely, during the same period, tomiNet, MUX Protocol, and Dybex have experienced decreases of 36%, 28%, and 27%. that.

 Investors should bear in mind that the value of cryptocurrencies can decline rapidly, with no guarantee of recovery. Take XRP, for example, which reached an all-time high of $3.84 in early 2018 but has never regained this price, despite a prolonged bull market.

While the majority of cryptocurrency projects operate with legitimate intentions, there exists a small segment within the industry whose sole objective is to deceive as many victims as possible into parting with their money. These are complete scams.

A case in point is OneCoin, one of the biggest cryptocurrency scams in history, which defrauded investors out of $25 billion. Another notable scam is BitConnect, which cost victims billions of dollars. It often proves challenging to differentiate between genuine projects and fraudulent ones. Although a project may appear to have solid objectives and simply require a flashy website and comprehensive whitepaper, this doesn't guarantee the achievement or even an attempt at reaching its goals.

To navigate this landscape, thorough research, due diligence, and diversification are vital. Risk-averse investors allocate only a small percentage of their portfolio to cryptocurrencies and ensure a well-balanced mix of different projects. This approach safeguards against the potential failure of a single cryptocurrency investment, thereby preserving the stability of the broader portfolio.

Third-Party Risks - Such as Wallets and Exchanges

First-time cryptocurrency investors should also take into account the risks associated with third parties.

For instance, individuals who store their cryptocurrency tokens in a self-custody wallet are vulnerable to hacking attempts. If a hacker successfully gains access to the wallet, they will have control over the funds. Naturally, the hacker will proceed to steal all the cryptocurrencies stored in the wallet. In such a scenario, the rightful owner will find themselves with no recourse, as self-custody wallets are decentralized.

Another third-party risk that should be considered is related to exchanges. As an example, FTX, which was once one of the largest exchanges globally, held billions of dollars worth of customer funds. However, FTX has since collapsed, leading to significant losses for many investors.

Given these circumstances, investors should only consider utilizing a regulated exchange. For instance, eToro is regulated by reputable entities such as FINRA (US), FCA (UK), ASIC (Australia), and CySEC (Cyprus). Additionally, eToro also provides a custodial wallet that holds a license from the GFSC (Gibraltar).

Cryptocurrency Prices & Volatility

Cryptocurrencies function within fully operational trading markets. Similar to stocks, ETFs, bonds, and commodities, cryptocurrency prices experience fluctuations. As mentioned earlier, these prices are influenced by broader market conditions. In other words, the demand and supply dynamics determine whether a cryptocurrency's value increases or decreases.

With that being said, the cryptocurrency markets tend to move in cycles. During bullish periods, numerous cryptocurrencies observe price increments. Conversely, when the markets turn bearish, most cryptocurrencies decline in value. For example, in the previous bull market, many cryptocurrencies reached their all-time highs in November 2021. However, at present, most of these cryptocurrencies, including Bitcoin and Ethereum, are trading at a fraction of their former peak levels.

Cryptocurrency prices are typically denominated in US dollars, similar to traditional commodities like gold, silver, and oil. However, cryptocurrencies can be acquired using any local currency, be it British pounds, euros, or Argentine pesos, making cryptocurrency investment more accessible than ever before. The profitability of investing in cryptocurrencies depends on the price movement of the chosen digital asset.

To illustrate, let's consider an investor who purchases Ethereum at a price of $1,800. If the value of Ethereum rises to $2,700, the investor stands to gain a significant 50% return on their investment. It is important to note that these gains are only realized when the investor decides to sell. Conversely, the same principle applies to losses as well.

For instance, individuals who bought Bitcoin at its peak in late 2017 would have paid $20,000 per unit. However, the price of Bitcoin later plummeted to under $4,000 within a year. Nonetheless, Bitcoin has since recovered and reached substantial highs of over $68,000. It is therefore crucial for investors to resist the urge to engage in "panic selling" during bearish market conditions.

Cryptocurrency Use Cases & Adoption
The most desirable cryptocurrencies to acquire are those that possess tangible use cases. This significantly enhances the likelihood of widespread adoption by the public. As more people use a cryptocurrency for its practicality, its ability to attract new buyers improves. Consequently, this enables the cryptocurrency to appreciate over time.

Let us now delve deeper into some of the most promising use cases for cryptocurrencies.

Store of Value
Bitcoin is widely regarded as a reliable store of value, which provides a solid use case for the world's largest cryptocurrency. Firstly, the total supply of Bitcoin is limited to just 21 million tokens. This limitation, similar to gold, creates a sense of scarcity. At present, over 19.4 million tokens, or 92% of the total supply, are already in circulation. Additionally, new Bitcoin tokens enter the market strictly based on code.

Every 10 minutes, 6.25 BTC are mined.
Approximately every four years, the 10-minute supply of Bitcoin is reduced.
Consequently, the next Bitcoin halving will decrease the supply to 3.125 BTC every 10 minutes.
Importantly, the supply of Bitcoin is immutable and cannot be altered or manipulated. Unlike central banks, Bitcoin is not prone to hyperinflation.

Compared to real estate or gold, Bitcoin is a more suitable store of value. Bitcoin can be easily transferred and divided into fractions. Furthermore, Bitcoin operates in a highly liquid market, allowing investors to enter or exit their positions 24 hours a day, seven days a week. This flexibility is absent in traditional stores of value.

Medium of Exchange
Cryptocurrencies also serve as an excellent medium of exchange. In simple terms, a medium of exchange facilitates the transaction of value, such as buying or selling goods and services. While traditional currencies like dollars, pounds, and euros serve as globally accepted mediums of exchange, cryptocurrencies offer distinct advantages.

Consider the process of transferring funds to another country. Typically, the sender would employ a bank or a money transfer service like MoneyGram or Western Union. However, these methods often entail a wait of several days for the funds to arrive. Moreover, cross-border fees can be exorbitant, particularly with minor or exotic currencies.

Now let's contrast this process with using a cryptocurrency like Ethereum. According to EtherScan, senders only need to pay $0.72 in transaction fees, and the transfer is completed in less than 30 seconds. This holds true regardless of the location of the sender or receiver. Moreover, the fee remains constant whether $1 or $1 million worth of Ethereum is being transferred.

Many other cryptocurrencies, including Dogecoin, Solana, and BNB, offer fast and cost-effective transactions. This solidifies cryptocurrencies' use case as a medium of exchange.

Network Fees
Certain cryptocurrencies possess utility due to their requirement for paying network fees. For instance, Arbitrum acts as a layer 2 solution for Ethereum-based projects.

Arbitrum's network enables ERC20 tokens to benefit from enhanced transaction scalability and lower costs. To utilize the Arbitrum network, projects must pay network fees using ARB tokens, which serve as the native cryptocurrency of Arbitrum. This ensures that the tokens are equipped with a practical use case.

Similarly, developers seeking to deploy smart contracts on the Ethereum network must pay fees in ETH. Those wishing to engage with the Binance Smart Chain must pay fees using BNB.

Short-Term Cryptocurrency Trading vs. Long-Term Crypto Investing
Like other asset classes, cryptocurrencies can be acquired for both short and long-term investments. In either case, it is crucial for investors to establish a clear strategy before proceeding.

Now, let us closely examine both short and long-term cryptocurrency trading and determine which approach is more suitable for beginners.

Short-Term Trading
Many traders engage in the buying and selling of cryptocurrencies on a short-term basis. Various strategies can be employed for this purpose.

For instance, some traders invest in cryptocurrency presales, which resemble stock IPOs. They allow investors to purchase a newly issued cryptocurrency token before it becomes available on exchanges. In most cases, cryptocurrency presales offer early investors a discounted price, mirroring IPOs. This short-term strategy entails buying the presale token at a lower price and selling it once it is listed on an exchange.

Suppose a cryptocurrency presale provides its native token to early investors at $1.
Upon listing on exchanges, the cryptocurrency's price rises to $1.50.
Investors who bought the token at $1 instantly gain a 50% profit.
The short-term trader may choose to exit the market and realize their 50% gains once the token is listed.

Another short-term strategy involves day trading cryptocurrencies. This involves buying a cryptocurrency and selling it within minutes or hours to profit from the ever-changing prices. Day trading is considered a lower-risk strategy, as it allows traders to capitalize on short-term price fluctuations.

Another advantage of long-term strategies is their ability to facilitate a more passive approach for investors. There is no constant need to monitor prices on a daily basis or be concerned about market volatility. Furthermore, investors can alleviate the recurring question of whether cryptocurrency will appreciate in value.

Long-term investors can also fully embrace the concept of dollar-cost averaging. This entails purchasing small increments of cryptocurrency at fixed intervals, such as buying $50 worth each month. As a result, the average cost of the investment is spread out over time, taking into account broader market conditions.

Insights from Industry Experts on Investing in Cryptocurrency

Are you still pondering whether you should invest in cryptocurrency at present?
This section explores the perspectives of experts regarding the future of cryptocurrencies.
Joseph Raczynski – Technologist and Futurist at Thomson Reuters

"Some countries will adopt BTC as their primary currency. Its fixed circulation and ease of transfer make it ideal for transitioning to a 'bankless' paradigm in this ecosystem."

According to Joseph Raczynski, a Technologist and Futurist at Thomson Reuters, Bitcoin will play a significant role as a medium of exchange. Raczynski highlights the ease of transferring Bitcoin and its predictable supply. Additionally, there is speculation that Bitcoin can address the needs of the unbanked population.

Mark Yusko – Founder and CEO of Morgan Creek Capital Management

Mark Yusko, Founder and CEO of Morgan Creek Capital Management, believes that the future of Bitcoin is incredibly promising. Yusko predicts that by 2028, Bitcoin will exceed $250,000. At this valuation, Bitcoin's market capitalization would surpass $4 trillion. Considering the current price of approximately $30,000, this indicates a potential upside of over 730%.

Cathie Wood – CEO of ARK Invest

Cathie Wood, CEO of the investment fund ARK Invest, recently made an audacious Bitcoin price projection. Wood asserts that by 2030, Bitcoin will surpass $1 million per token. If this prediction materializes, Bitcoin's market capitalization would reach approximately $17 trillion. Based on current prices, this implies a potential upside of over 3,200%.

Remember, these are subjective predictions made by individuals. There is no guarantee that any of these forecasts will come to fruition. It is crucial to consider this when contemplating the question of whether cryptocurrency is a viable investment.

Is Now an Opportune Moment to Buy Cryptocurrency?

• During a bear market, one of the best times to purchase cryptocurrencies arises.
• This allows investors to enter the market at significantly lower prices.
• This mirrors the concept of buying stocks during a recession.
• If the strategy is successful, investors will witness the appreciation of their cryptocurrency when the next bull market arrives.
• However, there is no guarantee that this will transpire, so investors should carefully assess the associated risks of financial loss.

Which Cryptocurrencies are Investors Currently Acquiring? Top 5 Coins for Novices
Is investing in cryptocurrency a prudent choice? This hinges upon the investor's financial goals and risk tolerance. Nonetheless, one of the most challenging aspects of the investment process is identifying which cryptocurrencies to acquire. The market comprises thousands of cryptocurrencies, each offering distinct upside potential and risks.

In this section, we will explore five cryptocurrencies that experienced investors are presently acquiring.

1. Wall Street Memes – New Crypto Project Generating Over $24 Million from Early Investors
Wall Street Memes represents a novel cryptocurrency project, currently available at presale prices. As mentioned earlier, cryptocurrency presales have a resemblance to stock initial public offerings (IPOs). They empower investors to purchase the cryptocurrency token before it is publicly listed, thereby securing it at a more favorable price point. The presale period for Wall Street Memes continues to gain traction, both within and beyond the cryptocurrency domain.

Cryptocurrency operate Prices & Volatility

This is primarily because Wall Street Memes has successfully managed to raise over $24 million in presale funding. Some investors are acquiring Wall Street Memes tokens with the expectation of short-term gains, while others anticipate substantial returns from a long-term holding. So, what exactly is Wall Street Memes? Put simply, this project aspires to foster greater financial equity globally by leveling the playing field for average citizens and diminishing Wall Street's influence on the global financial system.