Most experts and analysts within the cryptocurrency community will most likely not recommend investors outside of the cryptocurrency market to not invest in altcoins more than they can afford to lose.
One major reason behind the precaution offered by experts and analysts in the cryptocurrency market is due to the simple mindset of casual investors diving into the cryptocurrency market with the sole intention of securing a short-term profit.
Admittedly, a bubble is emerging in the cryptocurrency market and the evident trend cannot be denied. In fact, Ethereum co-founder and developer Vitalik Buterin recently said in regards to the Ethereum market and the growing ecosystem of overvalued initial coin offerings (ICOs):
“There's no "cure" for bubbles except to let them run their course and pop, unfortunately.”
Investors have considered bitcoin as a long-term investment, safe haven asset, settlement network and a digital currency since mid 2015 and the global adoption and recognition of bitcoin on top of its liquidity cannot be dismissed. Hence, for investors and users that perceive bitcoin as a digital currency and a long-term investment, it is relatively safe to invest large amounts of money into the cryptocurrency.
Bitcoin is still at its early-stage of development but it has gone through its experimental safe, as did Ethereum and a few other blockchain networks as Monero. However, investments in general must be made with significant precaution and the vast majority of investors funding ICOs and emerging blockchain networks, projects and companies lack knowledge in the purpose, structure, monetary policy, technical intricacies and philosophy of most cryptocurrencies, cryptoassets and crypto-networks.
In particular, a smart contract-based blockchain project deployed on top of the Ethereum protocol that has been endorsed by billionaire investor Tim Draper completed a $150 million ICO recently. However, experts including Andreas Antonopoulos and Augur co-founder Joey Krug criticized the Bancor Network and the entire ecosystem of investors for investing $150 million worth of Ethereum into an untested code.
On June 12, Krug stated:
“Dear God the free market just gave $150M to something we found out didn't work in practice in the Augur beta.”
Conducting proper research and evaluation of blockchain projects before investing in them is an obvious approach which investors must take but often dismiss. Antonopoulos revealed that his personal approach to investing in cryptocurrencies is not investing more than he can afford to lose by maintaining a diversified portfolio of many cryptocurrencies.
“I own a few different crypto assets as part of a small but diversified portfolio. I only risk as much as I'm willing to lose,” said Antonopoulos.
Previously, as Bitconnect reported, analysts in Japan including Indie Square co-founder and Japan-based researcher Koji Higashi stated that not-so-smart money has been flowing into projects such as Ripple and NEM along with many ICOs conducted by blockchain projects launching on top of the Ethereum protocol.
Cryptocurrency market is still at its early stage despite it being a $110 billion market. Investors should always approach altcoins and cryptocurrencies in general after conducting necessary research, evaluation and analysis.
