Should You Invest in Cryptocurrency: Evaluating Your Goals

The crypto market is one of the most promising financial ecosystems, opposing many limitations of traditional assets and monetary systems. However, the rate of adoption is still relatively low, with just 16% of UK individuals owning crypto and over 40% of institutional investors expanding into primarily Bitcoin and Ethereum.

The number of unique wallets interacting with DeFi protocols in 2024 has grown dramatically. Within the Ethereum ecosystem, the number of monthly active users reached over 22 million in December 2024. The future of blockchain investments seems bright considering the slow-but-steady rate of adoption. It is already impressive!

The growth of various metrics is a pleasing sight to look at. Unfortunately, it is not fast enough to attract more conservative capital holders and businesses.

Should you invest in crypto?

If you are a non-investor, you are probably concerned with several issues. According to RIF, the vast majority of non-investors are still held back by distinct concerns:

• The lack of utility. While many of the contemporary cryptocurrencies can be used for all sorts of things on paper, it is hard to find retailers and online stores that accept even mainstream tokens like Bitcoin and Ethereum. For instance, there are only 14,955 (as of the time of writing) locations accepting Bitcoin in the US, according to BTCmap.
• Difficult onboarding is the second biggest concern of non-investors, with over 24.56% saying that it is the most pressing issue. It is true that user experience is rarely a top priority for a typical DeFi startup. Nonetheless, many companies are strongly focusing on delivering a better UX/UI product to the decentralized finance ecosystem.
• High risk is cited as a significant concern by over 26% of all non-investors. Cryptocurrency risk assessment is an incredibly challenging task even for professionals. The diversity of the ecosystem, a multitude of risk factors, and the lack of information about many projects create an uncharted environment, where navigation is close to impossible.

Other concerns that may prohibit newcomers from entering the crypto market include unclear regulations, the lack of consumer protection, unreliable technology, and more. With so many disadvantages, it seems like a miracle that there are millions of people joining the sector each month!

Long-term vs short-term crypto strategies

There are three main categories of capital holders who enter the crypto market and drive the bulk of cash inflow:

1. Cryptocurrency enthusiasts believe in the future of blockchain technology and are hoping for massive price appreciation. Bitcoin “hodlers” are among the most vocal supporters of decentralization. They often use strategies like Distributed Cost Average to purchase as much BTC as possible and never sell until retirement.
2. People are looking for ways to make a quick buck. The speculative nature of the crypto market attracts many retail traders who want to make money by arbitrage, day trading, scalping, and other such approaches. Some are investing in high-risk protocols that promise astronomical returns. These investors are often driven by FOMO and move market metrics quite a bit.
3. Curious onlookers who want to experiment with novel financial instruments. Unfortunately, many people from this category do not understand the value of decentralization or the immense utility of many decentralized protocols. They are more interested in trying something new without fully understanding it.

These are key demographics for the DeFi ecosystem. Institutional investors are waiting for the moment when the number of individual users will reach a certain critical mass, allowing them to move in with large capital.

Aligning crypto with financial goals

While it seems that the cryptocurrency market is only for people who are interested in making money by speculating or holding for years, the reality is not that simple. Contemporary capital holders have many reasons to start exploring the DeFi ecosystem.

Here are some of them:

• The fusion of traditional and crypto markets. One of the hottest narratives in the world of decentralized finance is the DeFi and RWA investment potential. MakerDAO is a pioneer in stablecoins. It has recently expanded into the RWA (real-world assets) territory. The tokenization of physical infrastructure, real estate, and other assets is a very important trend.
• Hedging against fiat inflation. The ongoing cost-of-living crisis in many developed nations made many investors think about the future of fiat-based economies. Individuals are also concerned with the value of their life savings slowly dwindling away due to inflationary pressures. Some are using stablecoins for capital preservation in unstable economies. Others are more interested in buying BTC, ETH, and other tokens to hedge against depreciating fiat currencies.
• Unprecedented diversity of the market. Some estimates put the number of existing cryptocurrencies at 25 thousand. These tokens are untied from other investment instruments available to investors in the DeFi ecosystem. You can invest in liquidity pools, lending protocols, liquid staking platforms, and more. It is a great destination for capital holders who want to create a balanced asset composition that can perform under all sorts of market conditions.
• The existence of many useful tools and services. The crypto industry has matured to the point where investors can use specialized instruments for everything. You can find tools for tax reporting, portfolio management, risk assessment, insurance, and more. Platforms like DappRadar, DeFiLlama, CoinGecko, and many others are quite handy!

Note that it is hugely important to clearly understand why you want to expand your portfolio with cryptocurrencies. Evaluating crypto investment goals is a difficult task for many newcomers who may not understand the utility or potential of some of the most popular tokens.

A good idea for many beginners is to get started with reliable, low-risk options. One way to find them is by using the Rivo Yield Marketplace, where all featured strategies are picked by professionals and verified by teams of trained specialists. Here, you can rank investment opportunities by their risk level and pick pools that have relatively high APY while exposing you to low risks.

DYOR is still quite important

“Do Your Own Research” is the motto of the crypto community. It means that all investors must carefully observe the market, identify valuable opportunities, and do their due diligence. With the share of fraud and pump-and-dump schemes in the market, it is crucial to spend time digging up as much information about potential investments as possible.

We strongly encourage all our readers to dedicate time and effort to researching investment strategies before committing, even if you are tipped off by a knowledgeable professional. While crypto market analysis is an incredibly complicated skill, you can master the basics by studying, experimenting, and making small errors.

A good way of avoiding many beginner mistakes is by going to the Rivo platform and searching for reliable investment strategies. You can also talk to the Maneki AI virtual assistant. It will learn your preferences and risk style to identify the most suitable options in the massive Rivo catalog. You will be able to create a balanced portfolio without any issues!