Crypto investors are those who fund cryptocurrency projects, buy or sell coins, or participate in DeFi via yield farming or staking. Ultimately, their goal is to either make profit or their own mark in the crypto world. Some of them might buy a cryptocurrency and hold on to it for years with the goal of earning interest or profit from valuation appreciation. Others already have an existing portfolio of coins that they trade on crypto exchanges. Some are still in the process of learning while others might be raising funds to deploy in a future company as they prepare to take their idea to the market. But all of them are united under one goal: making a profit.

When investors put money into a crypto startup, they not only back up a cryptocurrency but the idea and the team standing behind it. They keep three things in mind when choosing a project to invest in: team, vision, and market fit. 

Investors’ Goals

The goal of a crypto investor is simple: they will invest, sometimes at a loss, for the opportunity to profit from the eventual appreciation in the value of their assets. Usually, investors look for companies that have goals and a vision they align with. If the company and an interested investor share the same vision, the hurdle of courting investors becomes much smaller.

Investment goals should be formed after answering several questions such as:

• How much money is an investor willing to invest and ready to lose?

• How involved does the investor want to be? -It’s important to distinguish between investing and active trading.

• What cryptocurrencies will grow and bring more interest?

• Does the investor prioritize earning profit over investing in a long-term company idea?

New investors often fall into the trap of daily fluctuations in the price of crypto coins. Too often, new investors are fascinated by the rapid growth in the value of their assets and decide to hold them to see if they grow even more. Instead, they might want to sell as soon as they reach their investment goals. 

Why Do Investors Choose Crypto?

One of the most common reasons to invest in crypto is the urge to have a safe, long-term place in which to store value. Since cryptocurrencies are backed by cryptography, with limited supply baked right into the code, no political authority or government agency can influence their value by, say, printing money. This feature makes it an attractive option for those who are worried about the risk of hyperinflation.

The technology underlying crypto is often referred to as transformational and revolutionary. By excluding intermediaries from computer networks, blockchain promotes new types of economic activity that were once impossible. This ability strengthens trust in the future of digital currencies and attracts even more investment. 

For many investors, funding blockchain startups is a means of generating high returns while backing up the future of technology. One vivid example is the Andreessen Horowitz crypto fund. Time after time, the founders have proven to be committed to the technology and its development. Just recently the VC firm established a new $2.2 billion crypto fund to help startups build blockchain projects.

How Do Investors Perceive Risk and Hurdles in Tech?

There is widespread concern that technology firms have difficulty raising venture capital during their early stages of growth. This, in turn, reflects investors’ beliefs that investing in technology companies is associated with greater uncertainty, from a market and technology perspective, and therefore has higher risk. However, a study by Colin Mason and Richard Harrison shows that the general profitability profiles of investments in tech vs. non-tech companies do not vary significantly. This could mean that the risks associated with investing in tech, and specifically crypto, are exaggerated.

So, it looks like investing in blockchain might not be any riskier than investing in good old stocks. In fact, technology has driven transformative changes in every industry. The crypto market experiences fluctuations because it’s a new asset class. Fluctuations are common for any new asset class until it reaches critical mass. As most experienced traders from traditional finance know, where there is volatility and immaturity, there is money to be made.    Most industry watchers are aware of the continual interest of institutional investors and crypto’s eventual mainstream adoption. It looks like there won’t be an end to cryptocurrency anytime soon. 

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