Considering the recent upheavals in the cryptocurrency market, is it still possible to make money from there? Should you be looking elsewhere to make your fortune? Is it safe to put money into Bitcoin or any of the other cryptocurrencies out there?

About the Latest Market Panic

Bitcoin raced to record highs at the end of the last year. It got everyone into a frenzy – people were desperate to get in on the action and were even borrowing money to be able to do so. Then things started going wrong.

Moves in China to clamp down on Bitcoin exchanges, and moves by major banks in the United States to prevent the purchase of cryptocurrencies on credit cards spooked the market. In the course of a week, the value of Bitcoin had halved, and other cryptos also took a dive.

Those against the idea of cryptos, in general, took this as an opportunity to spread doom and gloom. It was only natural that this happened, according to them – cryptos were overvalued and would soon become obsolete.

Understanding What Really Happened

In part, the doomsayers were right – the crypto market at the end of last year was overvalued. Was it inevitable that it crashed? Of course, but it's the same for any asset class that has been overvalued.

You had a huge increase in value and a bunch of inexperienced investors; it was the recipe for a perfect storm. Those people who had seen large returns were bound to cash them in at some stage because they were looking to make some easy money.

The inexperienced investors, who knew little about cryptos in the first place, were easily spooked by the drop in value. The same thing happens on stock exchanges around the world all the time. A negative report or rumor about a company can send its stock price down the drain.

What Should Investors Have Done?

That all depends – you would have to handle it much like you would any stock exchange transaction. It is best to buy low and sell high and, if you can, ride out the times when the stocks plummet in value.

Much like stock trading, crypto investments should be looked on as a long term investment.

Will Bitcoin Recover?

There are no guarantees. Understand that if you do venture into the crypto markets, you are risking the money that you put in. It is a high risk investment.

The value of the currency already started to make a recovery and pundits not only believe that Bitcoin will recover, but that it will reach as high as $100 000 in value eventually.

Now, you might think that this is over optimistic, but you need to consider the impact that Bitcoin's technology is having on our world. Blockchain tech is transforming the financial services industry.

Already all the major banks globally have started working on ways to start making use of this technology. It is also being adopted on a global scale by insurance industries. It is not a case of when blockchain tech starts to shake things up. According to sites like  BitFortune.net, it has already started to do so.

So, blockchain tech is not going anywhere, and the value of cryptos will no doubt start to rise again as the technology is more fully understood and adopted.

Will There Be Ups and Downs?

There will naturally be more highs and more lows. The crypto market is very volatile – especially since it is completely market driven. There are no central authorities to shore up its value or stabilize prices.

What is a Good Investment Strategy Here?

A good investment strategy would be to treat this as you would a high risk investment on the stock exchange. You wouldn't invest all your funds in one high risk stock, would you? Of course not, you would diversify your portfolio.

People were so caught up in the Bitcoin frenzy that they forgot the basic rules of good investing and didn't bother to hedge their bets at all.

The best advice is to start with an investment amount that you can afford to lose. Do NOT borrow money to invest, and make sure that you can leave the money there over the long term.

So, should look at cryptos as a way to grow your retirement portfolio? Possibly, but the question of how heavily to invest would depend on how much time you have to recover any losses made. If you are ten years away from retirement, for example, it is not the time to be taking huge risks.

If you are in your twenties, on the other hand, you can consider investing more. Either way, put in money that you are not going to need for at least five to ten years or so. That should be sufficient time to ride out any fluctuations in the market.

Consider your investment carefully, and you could stand a good chance of making a profit, without losing out over the long term.