Should You Be Buying Crypto In 2022?

In 2021, everyone was hopeful that the crypto industry would take off and bring investors to the moon. Come 2022, and it’s safe to say that not everyone carries that same outlook.

While there has certainly been growth for some crypto coins, it’s clear to see that crypto isn’t performing well. This can be tied to a few key reasons.

For one, an oncoming recession continues to dissuade people from investing in these financial assets.

Secondly, major cryptocurrencies like Bitcoin and Ethereum have plummeted since their all-time high. Even long-term moving average graphs like the MA200 and MA50 show a bearish trend.

On top of that, rising interest rates, inflation, and a turbulent global situation have made stock options and cryptocurrencies far less appealing to the general public.

So, the question remains—should you be buying crypto in 2022?

Let’s weigh the facts, the pros, and the cons.

1) “Be Fearful When Others are Greedy…”

“…and greedy when others are fearful.”

This quote by esteemed billionaire investor, Warren Buffett, is often heralded as one of the most important pieces of advice in the investing world. And it absolutely applies in the cryptocurrency world.

As prices continue to drop and the market solidifies as a bearish downtrend, it’s not uncommon for more conservative investors to take the backseat when it comes to trading cryptocurrency and wait this one out.

However, some would argue that it’s exactly during these bearish times that the conditions are perfect for scoring a quick profit thanks to lower prices.

While cryptocurrencies may not return to their all-time high for months, the nature of the market has historically been cyclical.

Take for example the early cryptocurrency crash of 2018. Bitcoin has lost over 70% of its value in just a matter of weeks, from $18,000 to $3,000. Despite that, Bitcoin has managed to recover and hit a new all-time high of $68,000 the following year.

Trading and cost averaging during slow periods can help investors buy more Bitcoin or Ethereum at a discount.

And in the future, if and when the market corrects itself, these investors will be able to reap the rewards of their risk and cash in at a higher rate.

2) The Market is Overly Volatile

The cryptocurrency market is considered to be one of the most volatile in the financial world.

A day doesn’t go by where there isn’t some sort of news that rocks the boat, whether it’s a positive or negative development.

For instance, Terra Luna has gone from a top 5 cryptocurrency coin with high potential to a virtually worthless token, falling 99.99%, in a matter of days last May 2022 as soon as its stablecoin UST depegged from its $1 price.

Unlike stocks where there are safeguards and measures in place to prevent blatant market manipulation, the crypto world is still dubbed the Wild West by regulators—and rightfully so.

This volatility often leads to dramatic price swings that can leave unskilled and conservative investors down double-digit percentages in a matter of hours, which is something that doesn’t happen in normal stock trading conditions.

While more established crypto tokens like Bitcoin and Ethereum are not as volatile as some of the smaller altcoins in the market, they may still be viewed as high-risk assets when compared to stock index funds like the S&P 500.

3) The Future is Hopeful

In spite of these concerns, many remain optimistic about the future of cryptocurrency—and for good reason.

For starters, Bitcoin and Ethereum have become household names at this point, with more and more people becoming interested in buying these tokens in an Australian crypto exchange, like Independent Reserve.

On top of that, there’s a healthy deployment of various new protocols that continuously elevate the standards of the industry as a whole. This ranges from better governance models to improved staking mechanisms, and everything in between. 

This not only benefits the cryptocurrency bubble, but it also extends far beyond and overlaps with real-world applications in fields such as tech, law, logistics, and finance.

And with a total market cap that’s still relatively small when compared to other asset classes, there’s more than enough room for growth in this space.

Should you buy crypto in 2022?

With all of this in mind, should you buy crypto in 2022?

By analyzing the market as rationally and informed as possible, it’s possible to make decisions that could lead to profitable investments in the future. But to answer the question—it depends.

If you’re a conservative investor who doesn’t have the time to research individual crypto, then it might be best to wait on the sidelines for now and see how the market pans out. You could also try to invest in safer options like Bitcoin and Ethereum.

If you have a higher risk tolerance and you’re familiar with the inner workings of cryptocurrency, then there might be some good opportunities for buying altcoins in 2022.

But most important of all, never invest more than you’re willing to lose. 

Many people have lost their life savings in the crypto market as a result of complacency or bad luck. It’s important to treat cryptocurrency as a high-risk investment and research your options thoroughly, no matter how optimistic you might be about its future.