Crypto Investing Strategies In 2022

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In February, we saw Bitcoin’s market value hit $1 trillion for the first time. Many of us were introduced to NFTs for the first time. People tried to make sense of “meme coins” as Elon Musk talked about Dogecoin on Saturday Night Live. 

No matter what circle you’re in or where you consume your news from, the chances are you heard quite a bit about crypto this year.

Let’s look at crypto’s rise and some ways to think about the asset—no matter your investing strategy.

Crypto Is Everywhere. How Did This Happen?

Chances are that the first time you heard about crypto was Bitcoin. While that was the dominant crypto for many years, this year introduced others like Ethereum and NFTs to the mainstream.

Did you know what an NFT was before this year? If you answered no, you’re not alone!

Even in April of 2021, Bloomberg found that only 27% of Americans were very or somewhat familiar with NFTs. Since then, you can find NFTs everywhere, from 60 Minutes to your favorite entertainer’s profile picture on Twitter. Jimmy Fallon, Jay-Z, and Steph Curry are just a few of the A-list celebrities who have changed their profile pictures to NFTs.

This is just one example of how crypto went from somewhat fringe to center stage over the past year. 

There are plenty of reasons we’ve seen this growth:

  • Low fees
  • People are intrigued with new forms of investment
  • They’ve become easier to acquire with the rise of fintech
  • They are decentralized and seen as a way to retain stability in the event of turmoil

Now that we know about the rise of crypto, here are some ways for you, as an investor, to think about it.

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Diversifying to Include Crypto

While crypto is new for many investors, it can be used in a very familiar way: to diversify your portfolio.

Investors have diversified using real estate investments, commodities, and a variety of other investment types. Using crypto to diversify your portfolio may feel similar and is used by investors with all kinds of strategies, levels of experience, and risk tolerances.

A popular reason that it’s used to diversify is that, unlike most assets, it’s not tied to any government’s currency. That means that its value can remain strong even in decimated financial markets. However, crypto doesn’t come without risk and is often considered a more volatile asset.

Crypto ETFs

Interested in investing in crypto, but not sure which coin to choose? Or worried about the risk it introduces? Crypto ETFs, such as the BITO ETF found on platforms like M1 Finance, are a new option for investors.

While not an investment recommendation, this is one of the simplest ways to get exposure to crypto without having to spend hours researching different cryptocurrencies and learning the ins and outs of owning crypto. It also helps keep your accounts consolidated and lets you invest in a platform you already trust.

While crypto ETFs are not the only way to gain exposure to crypto as an investor (you can invest directly in different coins), they are a new way to trade on major U.S. exchanges.

What to Consider Before Investing In Crypto

Like any other investment, be sure to do the following before adding crypto to your portfolio:

  • Research the specifics of the crypto investment you’re considering
  • Be sure that the investment matches your risk tolerance and investment horizon
  • Consider your financial goals

Crypto hit a whole new level of popularity in 2021, and it probably isn’t going away anytime soon. Be sure to stay informed and decide what works best for your portfolio.

If you’re just getting started investing or are looking for more out of your brokerage, sign up for M1. M1 Finance is the Finance Super App that gives you the tools you need to invest, borrow, spend, and build the future you want—even when it comes to crypto ETFs.

‘All investing involves risk, including the risk of losing the money you invest. Brokerage products and services are offered by M1 Finance LLC, Member FINRA / SIPC.’