While cryptocurrency has experienced a volatile week, the largest crypto currency, bitcoin, has made a stunning comeback this week, reclaiming the $30000-level. The digital currency has been in red territory for the past eight weeks, oversold to bear market levels. On Monday, a large portion of the market turned green, including Ethereum, the second largest cryptocurrency by market cap. Ethereum is currently trading around $1,900.
Investing in low-cost index funds
With inflation near its highest level since 1981, investors are wrestling with geopolitical crises and tighter monetary policy from the Federal Reserve. Recently, the Federal Reserve’s minutes revealed plans to shrink its balance sheet by $95 billion per month to combat inflation. In the past year, consumer prices have risen 8.5%, the fastest rate since 1981. The meeting between the two central bankers may calm investor nerves, but it will also cause investors to consider investing in low-cost index funds as Bitcoin reclaims $30000.
While Bitcoin has been a sea of green in recent weeks, experts advise against sinking too much of your portfolio into crypto. Financial advisors say that it is crucial to have other financial priorities first. A volatile crypto investment can interfere with those priorities. “Invest only with money you can afford to lose,” says Nate Nieri, CFP at Modern Money Management, a San Diego-based firm.
Don’t check on cryptocurrency markets
One of the best ways to protect yourself from the pitfalls of cryptocurrency markets is to avoid them altogether. Cryptocurrencies have been a hot topic in the news lately, with the value of bitcoin dropping 50% from its peak in 2021 in a matter of hours. While these coins may look like stable investments, they are anything but. Major cryptocurrency trading platforms are even warning their users that their money is not always safe. There are many factors to consider when investing in cryptocurrencies, including the type of crypto you invest in.
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