Bitcoin is a cryptocurrency that is based on a decentralized or peer-to-peer network. All transactions are carried out without intermediaries such as government, banks, brokers, or agents. One of the biggest benefits of investing in digital currencies is undoubtedly the ability to trade 24/7. This means people can track BTC’s dynamics in real time, which is not always possible for another market. Most stock trading is associated with activation at 6 am and a decrease in activity in the evening. Besides, people should consider local time. But Bitcoin is ideal for making money and investing not only because of its immense popularity and the ability to buy swaps at any time of the day. Our experts decided to tell you a bit about such projects. We have prepared a few tips for investors to help them minimize their risks.
What Factors Affect the Cost of Cryptocurrencies
During the boom that occurred in 2017, BTC’s rate reached $19,000 per coin. Such a dynamic was promising for many investors and people who are interested in cryptocurrencies. But it changed dramatically and the price reached 3 thousand dollars in just a few months. This is the minimum value in 5 years. Most of the investors who bought their portfolios (including closed-end funds and exchange traded funds) at the peak lost up to 80% of their invested capital.
However, during the coronavirus crisis last March, the rate increased again and is currently around $35,000. According to experts, in the next 1.5 years, the price of the main digital coin will reach $40,000, that is, it will grow by 263%, while the ETH rate will rise by 1479%, to $6,000. The main factors affecting the rate of cryptocurrencies will be the following:
- Interest in Bitcoin from both private and institutional investors. The main factors that indicate a high likelihood of further price increases are the growth in the number of e-wallets with a balance of more than 1,000 BTC. Indeed, it’s precisely the manipulations of large traders that can lead to significant changes in rate fluctuations.
- The specifics of global markets. The capital crisis generated by the pandemic could lead to tightening controls on cross-border money. Therefore, people will have to look for alternative ways to invest. Buying BTC could be promising. This is because investors will be able to trade regardless of geographic location.
- Legalization of BTC and other cryptocurrencies as the main financial tool. In recent years, this has been a trend for the United States and some EU countries. Cryptocurrencies are gradually entering the global financial system, and this is an impeccable fact. Such dynamics will affect the value of the BTC and LTC.
Investing and mining cryptocurrencies is promising but risky. But this is not about account security. The first bitcoin was mined on January 3, 2009, since then the popularity of this financial tool has only increased, despite the price fluctuations. All cryptocurrencies are completely digital assets, and for many years such a system has never been hacked. This is because each user is given a private key and any e-wallet is protected accordingly.
Specifics of Buying and Selling Digital Currency
The most popular way to invest in 2021 is buying a bitcoin. In the case of cryptocurrencies, investments may not always be short-term. Typically, traders decide to sell their portfolios a few months or several years after the purchase. The advantage of this type of investment is that people who own bitcoins can use it as legal tender. However, anyone should understand that in case of a decrease in the value of coins, traders will have to wait until their value rises again. In order to get the maximum profit and not miss the moment of sales, investors should pay attention to the following:
- Changes in legislation, political and economic events. Such factors greatly affect the financial market, and you must be aware of changes in order to understand the dynamics. Many traders visit the ICOholder website to constantly track the latest news.
- Technological developments around the world affect cryptocurrency rate fluctuations. Online publications periodically publish news that Elon Musk or other owners of large companies express their opinion on the prospects for cryptocurrency as a financial instrument. This confirms the interest in Bitcoin, Litecoin and other analogs.
- The most profitable investments are those that match our level of knowledge or experience. It’s worth noting that impulsive people or those who are unable to handle risk should avoid CFDs or binary options trading.
More than 90% of all Bitcoins are already in circulation, and it will take over 100 years to mine the other 10%. Buying cryptocurrency is a long-term investment. Therefore, people should also take care of the security of their e-wallets.
How to Invest Without Risk?
Do you want to become an investor and do not know where to start? It’s best to spend some time to figure out Bitcoin specifically. New knowledge will always be useful. Proper security of e-wallets should be a top priority for every newbie. Never invest all your funds that you cannot afford to lose. Diversify your portfolios so that any loss is always the least devastating. Another risk to new investors, which is quite unusual in other industries, is that most cryptocurrency platforms are blockchain-based (developers and traders use publicly accessible databases that keep a record of digital transactions). On the one hand, this provides high-level security and transparency of transactions, and on the other hand, it’s impossible to undo an operation once performed.
People who invest in cryptocurrency should understand that trading is very different. When buying gold (and even real estate), traders notice small fluctuations in prices, while virtual currency has repeatedly proven that its rates fluctuate in a short time. Therefore, before investing in cryptocurrencies, collect as much information as possible about the market. Only in this case can you minimize the risk of going broke.
Cryptocurrency is a financial tool that allows people to quickly and efficiently transfer any amount of money anywhere in the world without the need for a third-party intermediary in the transaction, which makes it very useful. Bitcoin has revolutionized the understanding of virtual currency and has greatly expanded investment opportunities. Ten years ago, people interested in BTC could buy cryptocurrency for little money and use it for anonymous online payments. Nowadays, many of them boost profits and return on investment because BTC is currently the most expensive cryptocurrency. This is one of the most important reasons for investing.
About the Author
Audrey Davis creates qualitative and informative articles. She combines analytical mind and creativity to make sure that her audience will receive maximum of information with interesting content. She believes that research, adaptability and stay current are the ways to become a great writer.