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Crypto markets in 2021: is it too late to invest?


By Bitpanda

Everybody wants a share of the crypto market but you may think that it’s already too late to invest. Read more about Bitcoin and its evolution, decentralised finance, smart contracts and how to avoid volatility so that you can make up your mind about investing.

Just a few years ago, crypto was perceived as quite a sketchy investment. Over time, however, its status has changed drastically and now it seems everyone wants to get involved. Are you also wondering whether you should invest too or whether it may be too late already? Let’s take a look at some facts and figures, as well as some of the advantages and use cases of crypto to help you decide.

The year 2021 has been like a rollercoaster so far. The markets started off with a bang, with Redditors gathering and shaking up Wall Street by trading Gamestop stocks. Then, Bitcoin started spinning the charts up and down, Ethereum surprised pretty much everyone with its price hikes, altcoins started booming like never before (just think about DOGE), new market actors even rushed in to join the race... let’s just say that it’s been an exciting year so far.

After all this, if you are still on the fence about getting in because you are worried that it’s too late to get started, come and find out whether cryptocurrencies might just be a valid investment for your future.

Let’s talk about Bitcoin

If you look at the price of Bitcoin right now, you may think that you no longer stand a chance of making a real profit. But is it really too late to start investing? We doubt it.

In 2008, Bitcoin was trading for less than a fraction of a cent. Now, Bitcoin’s price is mostly hovering around €40,000. Sure, whoever invested back in the day - and managed to not lose their wallet password - likely made some great returns. However, this doesn’t mean that you’re late to the game if you’re about to buy Bitcoin for the first time.

Looking back and ahead

Bitcoin’s journey hasn’t been a straight line. Looking back, we can see that some years have been fantastic, while some have been absolutely terrible: at the end of 2017, for example, the price peaked at almost €20,000, and the year after it fell from €13,800 to €3,300 within just one week to bring in the crypto winter.

Those who mastered the virtue of patience back in 2018 have certainly been rewarded by this year’s events - Bitcoin is now legal tender in El Salvador, Ukraine legalised Bitcoin, more and more companies are investing in Bitcoin and, despite its recent setbacks, its value grew by 350% in the past year.

So yes, it would be nice to go back in time and invest in Bitcoin - and other cryptos- but we can’t. On the other hand, no one can predict the future, either. Who knows, maybe in 10 years’ time people will be wishing they could go back to 2021 to start investing in cryptocurrencies.

A few ways to tackle crypto volatility

“But crypto is so unstable, anything can change any time!” Yes, this is the nature of crypto markets. The high volatility of the BTC price is caused by the fact that the Bitcoin market is still quite small on a global scale when compared to other markets. By the way, if you’re quite worried about volatility but still want to invest in the crypto market, Bitpanda gives you the option of investing in crypto indices. With our indices, you don't really have to worry about diversification and you can invest in the top 5, top 10 or even top 25 coins. Also, the Bitpanda Crypto Index rebalances automatically every month. In order to take advantage of cost averaging to reduce the impact of volatility, you can also set up a recurring savings plan for an asset of your choice.

DeFi and smart contracts as icing on the cake

Decentralised finance (DeFi) and smart contracts are a hot topic in the crypto world of 2021 and you may want to keep them on your radar. DeFi tokens run on blockchains via smart contracts, a feature that became very popular thanks to Ethereum and which is now being implemented by many other altcoins.

DeFi decentralises financial services and moves them away from traditional banking - think savings, loans, or insurance - all without intermediaries such as banks. DeFi and smart contracts are having quite an effect on the industry already: Cardano stepped up its DeFi game with the Alonzo upgrade - bringing smart contracts to its blockchain - and altcoins providing infrastructure, such as Solana, have seen some dramatic price breakouts lately.

Most DeFi projects are still at the early stages of what looks like a very promising implementation period for many of them: so at this early stage, could it ever be “too late” to start investing?

Education is key - but no need for a diploma

The increased popularity of crypto put personal finance in the spotlight for sure. With it came a lot of myths and misconceptions about investing in crypto.

It is important to keep in mind that investing always carries risks, from very low to extremely high. Also, be sure to remember that investing is not about either losing everything or becoming super rich super fast at all times. As much as we all would like to believe that the time we'll get our lambo is coming soon, becoming a millionaire overnight is unrealistic, so the first steps to investing are to always do your research, then assess your investment risks and educate yourself.

A good way to start your investing education is making sure you use the right tools: if you want to learn more about personal finance, cryptocurrencies and how to start trading, check out our Bitpanda Academy for free.

Taking care of your personal finances

Investing is not something exclusively for the wealthy anymore. You don’t have to worry about having to risk all your life savings to start investing: on our platform you can start investing from as low as €1, so you can start your journey step-by-step. Also, learning by doing can be a good practice: start with any amount of money you’re comfortable with for your trades. Plus, don’t forget that you can receive monthly rewards of the Bitpanda Ecosystem Token (BEST) to increase your holdings by up to 12%. Find more information here.