The value of the cryptocurrency, especially Bitcoin has increased dramatically recently. The value of bitcoin is surging at a rate of 40% which is over $2,000 in a day recently. With the value of cryptocurrency rising, people start to talk about it on TV, radio, and news site.
We Do Not Recommend People Borrow Money To Purchase Bitcoin or Other Cryptocurrencies
As people start to talk about it, many others will also follow up to invest because they don’t want to miss out the opportunity to make big money. Some people have reportedly taken out short term loans with a high hope to make a big gain while investing in the cryptocurrency.
It is risky to take out a loan to invest in cryptocurrency as its value is volatile. The volatility is so much higher than other investment classes. At the moment, cryptocurrency has an average volatility of 85% per year. If the value suddenly drop, you will have lost your capital investment and left with a debt to pay. Besides, being an unregulated currency, it can be easily taken advantage by hackers and scam companies.
Despite that, if you know how to invest in cryptocurrency to your advantage, you will be able to make some fast money. Before taking out a loan, you must ask yourself how it is going to put problems in your finance if you lose the investment. You can invest more from your savings as you make money over time. If you really want to take out a loan to buy cryptocurrency, you should only take out a loan for as much as you can afford based on your income. It should not interfere with your income when you take out the loan.
Borrowing means that you will sacrifice part of the profit that you earn because you have to pay back the lender. For this reason, you should try to borrow only a small amount for the first time. When you make profit, you can reinvest it by purchasing more coins and make more money.
If you want to take out a loan to buy cryptocurrency, make sure you first do research on the market and find out the best coin to invest in. When doing research, you should check the ROI so that you know how much roughly you can get back by investing in the currency. There are a few types of good cryptocurrencies that you can invest apart from Bitcoin such as Dash and Ethereum.
To increase the chance of making a profit, you should invest in more than one cryptocurrencies. In this way, if one cryptocurrency didn’t make money, you can still count on other cryptocurrencies. As a rule of thumb, you should hold your investment for at least one year. This will ensure that you earn a significant amount of returns than the original amount that you invest in.