The growing popularity of cryptocurrencies has gained traders’ and investors’ attention. It was reported that there is around a 78% increase in cryptocurrency transactions from 2019 to 2020. You probably heard that investing in cryptocurrency can be risky. That’s why you should know if it’s still a good investment in 2021.
Cryptocurrency Potential
Cryptocurrency has shown a lot of potential over the years. However, before investing in crypto, you should fully understand what’s “in” for you. Creating a cryptocurrency investment strategy is one way to optimize risk profit. Being fully aware of the situation and gathering pieces of information like this will be a great help if you’re just starting your journey in cryptocurrency.
Medium of Exchange and Payment
In current times, there are high chances that cryptocurrency can be the leading payment system. Several big companies accept cryptocurrencies as payment for their goods. In line with this, investing in crypto coins now is a good idea.
Institutional Investors in Crypto World
Since it was expected that there would be an increase in institutional investors in the crypto market, the popularization of the digital financial system won’t be hard anymore. The entry of these institutions implies that there will be a higher volume of trade and faster transactions.
Stablecoins’ Expansion
Expansion of Stablecoins can be the answer to minimize the high volatility of digital coins. Stablecoins is affiliated with fiat currency, and it is expected to give a solution for long-term coin instability.
The Rise of Cryptocurrency
The increase of interest in cryptocurrency is the reason for its popularity. It became more valuable and will continue to grow in the following years. However, risks are still present. That’s why making careful decisions on where to put your assets should be considered.
Bitcoin
Bitcoin is the most traded and invested crypto today. It was launched ten years ago and is still currently the leading cryptocurrency. This might be the best choice to protect your assets for the following years.
Ethereum
Ethereum can be less valuable than Bitcoin, but it brings various features like running and improving developers’ applications through smart contracts. It can also purchase other cryptocurrencies.
Litecoin
Litecoin is more of a mining side of crypto. It features a higher level of safety and security than Bitcoin and Ether. In addition to this, Litecoin transactions are faster compared to other cryptocurrencies available in the market.
Ripple
On the other hand, ripple is backed up by financial institutions like banks. It offers large financial transactions with low costs.
Investment vs. Trading in Cryptocurrency
You might be thinking about the difference between investing and trading. Well, both investment and trading are methods of earning profit in financial markets but have different approaches from each other. While both have goals to make a profit from cryptocurrency, investing has more long-term goals.
Investments are made for the gradual growth of assets for an extended period. They are more likely to disregard any short-term depletion and lower the risk of large financial loss. Trading is designed to be affiliated with strategies for daily, weekly, or monthly asset returns. Frequent transactions are usually happening if you’re a trader.
Long-Term Investment
Investments are made for long-term goals. These are assets that investors keep for several years or even decades. While trading can happen daily, weekly, monthly, or quarterly. Traders are the ones taking advantage of rapid price fluctuations that most investors disregard.
Transaction Amount
Investors usually engage their assets in fewer transactions to balance out the volatility of crypto. On the other hand, trading happens in a short period. That’s why they place more trades.
Knowledge in Cryptocurrency
Investing and trading require a lot of research and skills for your assets to make a profit. Being fully aware of the flow of the market is important. That is why most investors are studying the psychology of the market while most traders learn more about numbers and market charts. Investing your time and effort to fully understand the market is a great step to engage in cryptocurrency.
Risk Factors
Every trade and investment comes with a high risk. Risks in investing assets are much lower than in trading because profit in investments is gradually growing while trading has higher risks to have a high return.
Should I Invest in Cryptocurrency?
A lot of people in the current year are interested in investing in cryptocurrency. However, a lack of knowledge on where and how to start is preventing them. Deciding on investing in crypto can be complicated. That’s why gathering pieces of information about it and applying it to yourself is important. Nonetheless, engaging in the digital financial market will help you learn the process and see if it fits your plans and goals.
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