While crypto prices have been recovering over the last couple of days, 2022 has generally been a disastrous year for the industry. Not only have tons of crypto investors lost money, as the industry has fallen out of favour, but even companies like Voyager Digital (TSX:VOYG) have gone bankrupt due to all the turmoil in the space.
Just because the industry is out of favour, though, and major cryptocurrencies like Bitcoin (CRYPTO:BTC) and Ethereum (CRYPTO:ETH) have fallen more than 50% so far this year doesn’t mean that the industry’s long-term potential is no longer relevant.
In fact, while many high-quality cryptocurrencies trade cheaply, now is actually the opportune time to buy more. With Bitcoin and Ethereum specifically, neither of their technologies nor the potential they have offered has changed at all in the last nine months.
Therefore, for crypto investors who believed in the potential that these cryptocurrencies had in the past, there’s no reason not to believe in them today when you can buy them at a significant discount.
But how can we have the confidence to invest and avoid heavy losses after all the bankruptcies in the space? Here are a few things to consider.
Crypto investors need to buy for the long haul
First off, the most important thing to remember when looking for cryptocurrencies or crypto stocks to buy is that investors need to take a long-term approach.
Nobody knew for certain that there would be another significant pullback after the rally over the last two years. However, nobody also thought it would be smooth sailing forever with cryptocurrencies constantly just increasing in value.
This isn’t the first time a bear market has followed a massive rally in the space, and it almost certainly won’t be the last.
Therefore, it’s crucial that crypto investors find the cryptocurrencies with the best long-term potential and slowly build a portfolio over time. And for investors who were drawn to the space during all its hype last year, if you really are committed to owning these assets for the long haul, then now is the time to buy more.
When you approach these assets with a long-term mindset, not only will it allow you to take advantage of these pullbacks and see them for the opportunity that they are, but it will also help you to resist selling these assets well below their fair value.
However, investing for the long haul doesn’t help us to avoid buying stocks that could end up going bankrupt. That’s why it’s also crucial to do a tonne of research before you buy any crypto investment.
Do a ton of research to avoid the next Voyager Digital
As with any stock or business you buy, the more reading and research you do to gain knowledge and information about your target investment, the more risk you can mitigate by understanding how it may be exposed.
For example, Voyager Digital (TSX:VOYG) never seemed like a bad investment destined for bankruptcy. However, it, unfortunately, got caught up in other companies’ and funds’ bankruptcies, which had been a domino effect for months as cryptocurrency prices crashed.
Therefore, it’s not only crucial for crypto investors to do a ton of research before buying any of these assets, but it also shows why finding cryptocurrencies or companies with a track record is crucial.
Assets like Bitcoin and Ethereum have been around for several massive rallies and rapid bear markets. In addition, the technology they have has been proven to be reliable.
Meanwhile, many of the cryptocurrencies and companies that have struggled throughout this year are newer companies and projects that became popular in the recent bull market and had not yet been tested as the cryptocurrency industry goes out of favour.
So, if you’re looking to invest in the space and recognize the insane growth potential it offers, just remember you have to do a tonne of research before you buy, and assets with a longer track record will naturally offer more reliability.
