December 1, 2022

New Year’s Resolutions for First-time Crypto Investors

Cryptocurrency---Investment

Blair Halliday, Head of UK at Gemini:

2022 will be an exciting year for crypto innovation and adoption. We expect to see more fund launches, more NFT creation and ownership, broader public participation in crypto markets, and revolution across the digital asset spectrum from progress in the adoption of stablecoins and CBDCs, to the rapid rise of DeFi.

But how should first timers approach crypto? Here are Gemini’s New Year’s resolutions for the crypto curious:

1. Invest time to learn

New investors might feel like they’ve already missed the boat on crypto. That simply isn’t the case, there is still an opportunity to be part of this new frontier in finance, however we believe education and preparation is a key component when approaching this new asset class. If this is your first-time investing in cryptocurrencies, read up on the broader digital assets market – get a feel for the industry and the different types of coins available. Don’t invest if you aren’t sure of the risks and, when you do invest, choose a platform with institutional grade security and custody. 

Cryptoassets aren’t covered by the Financial Services Compensation Scheme, as your money is with high street banks so it’s important to transact through an exchange that has received FCA approval, such as Gemini. This ensures that you are doing business with a firm that is subject to regulatory oversight.

2. Inflation-proof your portfolio

Gold has long been the go-to as a hedge against inflation. But the price of gold suffered last year as investors fell out of love and looked to other assets for protection. Bitcoin’s lack of correlation to traditional asset classes has led to many arguing it has usurped gold’s place as the mainstream choice for inflation hedging.

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Consider whether cryptoassets offer the right inflation-proofing for your portfolio. Bitcoin’s finite amount has reassured investors, both retail and institutional, that it will hold its value. This argument is increasingly relevant as central banks continue quantitative easing programmes pumping fiat currency into the traditional financial system, ramping up inflationary pressures.

3. Diversify your investments

Cryptocurrencies are truly uncorrelated from traditional asset classes and so offer attractive diversification benefits. But there is also considerable diversification potential within cryptoassets, across a variety of tokens, platforms and technologies. For new investors building cryptocurrency diversification, you could hold bitcoin, ethereum, and litecoin, each of which are built with different benefits – for example bitcoin was designed to be an alternative to traditional currencies while etheruem is a programmable blockchain that underpins many decentralised finance projects and the NFT (non-fungible token) digital art space. For more knowledgeable crypto investors, mainstream, regulated exchanges offer at least 40 other cryptocurrencies you can choose to hold as well.