Cryptocurrency has been the rising star of the investment market in 2020. Experts believe that it will continue to shine in 2021. With the talk of cryptocurrency investment, we are asked several times as to what kind of investors invest in Cryptocurrencies. Well, here is the answer.
Cryptocurrency is certainly not the first digital currency, but it’s the first currency that has been officially recognized as the first Cryptocurrency. After the introduction of the first-ever Cryptocurrency, Bitcoin, there have been over two thousand Cryptocurrency today.
Every Cryptocurrency is different and works on other Blockchain. These cryptocurrencies can be easily accessed through online trading portals like the visit the official site. These portals educate as well as help them with the trades.
1. How Are Cryptocurrencies Different?
Cryptocurrencies are decentralized currency. This new financial system is underpinned by the distributed public ledger and is considered one of the most secure technologies ever existed.
While the sole purpose of these Cryptocurrencies was to provide a decentralized medium for the transaction, they have certainly become famous as one of the best digital assets.
Unlike fiat currencies, the supply of digital cash is limited in the market. Hence, they are not prime to inflation. The value of Cryptocurrencies depends on the trades made by the traders.
Since the market appearance, Bitcoin has attracted attention from investors and traders. This practice has helped Bitcoin to become the greatest digital asset in the trading market.
2. Why Are They Volatile? | Investments In Cryptocurrencies
As we have already stated above, Cryptocurrencies are decentralized and are not controlled by any central authority. The price evaluation comes from the traders who trade in Cryptocurrencies.
Cryptocurrency is relatively new compared to the old financial system. The market cap of the cryptocurrencies is equivalent to one of the enterprise companies. Hence, even a small trade can bring in a considerable trading curve.
If we look back in history, even the real estate business and gold were volatile markets in their early days. It took gold and real estate years to reach a stable point.
3. Cryptocurrency Investment: Is It A Good Idea?
The number of traders and investors are growing in the trade market. Since the IRS has announced that Cryptocurrency will be considered property instead of currency, the market has seen a high demand for Cryptocurrencies.
No investment is a safe bet. Investment markets are meant to be volatile. It is due to someone’s loss; someone can make a profit in the trading industry.
Cryptocurrency has always been considered one of the most volatile markets. Amid this fact, people tend to forget that, over the last couple of years, Bitcoin has seen a 1000% rise in the market price evaluation.
In 2020, when the pandemic shook the global finances, Bitcoin’s price dropped to $3000. We are all already at the end of 2020, and at the time of writing, the cost of Bitcoin is $18,210. That means within just a few months, Bitcoin prices have seen a surge of 600%.
Those who are still thinking that the Cryptocurrency bubble will soon burst, then let us tell you one thing; you all are missing a golden opportunity and optimal entry point into the Crypto trade market.
4. Who Can Invest In Cryptocurrencies?
Technologically literate people find it most comfortable to invest in Cryptocurrency. In a report made by Statista, more than 40% of Americans are aware of Cryptocurrency’s existence.
Out of the 40%, 60% of the people are willing to invest $1000 in Cryptocurrency than traditional assets. And most of the people who are eager to invest in Cryptocurrency are the younger generation (Millenials and Z generation).
5. The Bottom Line | Investments In Cryptocurrencies
Investing in any assets comes with its fair share of risks. Now it is up to you what kind of risk tolerance you have and just how high-risk taker you can be. These two factors will be the deciding factor while choosing assets fo9r the investment.