Cryptocurrency is billed as the ‘wild west’ of the financial world - often misunderstood, sometimes celebrated (when it’s ‘up’) and occasionally dismissed as a game of chance. But is investing in crypto really just speculating and gambling, or is it a more edgy way to diversify your portfolio?

It’s just another asset class

Sure, crypto might seem like it’s all about thrills, adrenaline and the next shiny thing - but just like stocks, bonds, and even commodities, crypto represents a form of value that investors can buy, sell, and trade. Yes, it’s volatile - but so are plenty of other asset classes. Oil prices fluctuate. Stock markets crash. Even gold has its wild swings. Yet, we don’t call those gambling, do we?

Crypto’s ups and downs might be extreme, but that doesn’t make it a game of chance. Think of it as a rollercoaster in a market that just happens to move at lightning speed.

The key is in the strategy, not the spin of a wheel. There’s research to be done, timing to consider and (don’t skip this step!) fundamental understanding of what you’re investing in. Don’t let the volatility fool you - this isn’t a casino, it’s just another corner of the financial market that happens to move a bit faster than the rest.

Returns are never guaranteed

Ask any seasoned investor, and they’ll tell you that risk-taking is part and parcel of the investment game. Because crypto is more volatile (its price fluctuation is more dramatic) than other assets, this perceived risk is often amplified - which might be why some folks mistake it for gambling. The reality, however, is that investment always involves risk, whether it’s stocks, real estate or the latest trendy token.

Doing your own research should be non-negotiable before investing. This includes understanding the different types of crypto assets out there i.e. the ‘bluechips’ and the startups; which tokens are speculative plays and which are more like infrastructure assets. Crypto investing requires doing research in the exact same way you would for a stock investing - it’s key to understand the company/token, what the problem it's solving is, who the team are, their track record and product-market fit. This might also include talking to other investors, following different types of influencers in the space and analysing their possible motives; as well as following the news and what moves the markets. This balanced approach where you draw on a set of trusted sources to make your own conclusions based on a combination of experience, gut feel and hard work and research is a wise approach and sound advice for any investor, whether you’re playing with blue chips or Bitcoin.

Just because the stakes can be high doesn’t mean you should throw caution to the wind. Investment is not about blind luck; but about calculated risk. Remember, the house doesn’t always win when you’re the one making all the calls.

The psychology of FOMO (or ‘Fear of missing out’)

FOMO can be a modern investor’s worst enemy. The reason why this term gets tossed around in crypto circles is because the market moves very fast. Every time you hear a story about someone making a ‘quick million’, it’s tempting to think you’re missing out on the jackpot. But beware: FOMO isn’t an investment strategy; it is often just a recipe for impulsive decisions.

Although crypto might lure people in with promises of sky-high returns, that’s also true of plenty of other investments. Chasing quick gains is risky in any market, and that adrenaline rush you feel is the same feeling that makes people buy lotto tickets. Unlike the lotto, however, crypto demands a rational approach. Rather than succumbing to FOMO, take a step back and ask yourself if the decision makes sense in the context of your personal investment strategy. Research has shown that once people invest in crypto, they rarely abandon the asset class.

In the end, crypto is what you make of it: treat it like gambling, and that’s what it’ll be. Treat it like a serious investment, and you might find it’s an asset class worth holding onto.

Disclaimer: Investing in crypto carries risk. Always do your own research or seek professional advice. Terms and Conditions apply.