Cryptocurrency Investment

The mainstream investment community is starting to take notice of cryptocurrencies. Still, the recent drop in coin value has many people wondering whether crypto is more of a danger or an opportunity.

Cryptocurrency assets have skyrocketed in popularity and are garnering demand from investors all around the world, despite varying viewpoints on the long-term prospects for Bitcoin (BTC) and other cryptocurrencies.

But the cryptocurrency market’s recent uptrend has begun to show signs of weakness. While the all-time high for Bitcoin was close to $70,000, its price has fallen by about 50% from late December 2021 to a low in mid-May, and as of June 2, it was still hanging around $30,000. Even other cryptocurrencies are having a hard time. Year to date, Ether (ETH) is down over 50%, Cardano (ADA) is down around 54%, and Polkadot (DOT) is down around 63%.

Even still, as of June 2, Bitcoin’s market valuation was above $570 billion, more than that of Meta Platforms Inc. (ticker: FB), one of the biggest tech companies.

Although Bitcoin dominates the cryptocurrency market with a 46% share, the industry is enormous. On June 2, the total market value of all tradable cryptocurrencies amounted to $1.24 trillion, with hundreds of them.

Cryptocurrency is no longer on the periphery of the financial system, thanks to the growing popularity and usability of crypto industries like smart contracts, decentralized finance apps, and NFTs. Because more and more companies are beginning to embrace cryptocurrencies and the blockchain technology that underpins their functioning, you may soon need to familiarise yourself with the ins and outs of the crypto world, if not contemplate making financial investments in it.

What Is Cryptocurrency?

Cryptocurrency is a kind of digital money that is protected by cryptography, or secure communications, and which may be traded freely between users online, kept as a savings asset, or put to use as an investment.

One unidentified creator going by the alias Satoshi Nakamoto, created Bitcoin, the first blockchain cryptocurrency. There is no central authority that oversees cryptocurrency transactions or exchanges. Instead, digital information about crypto transactions is often maintained on a public blockchain.

A digital record of all transactions is maintained using blockchain technology, which also offers a data format for the ledger that is trusted to be safe. Briansclub uses blockchain technology to provide facilities for buying and selling crypto tokens and coins on its website.

Cryptocurrencies, in contrast to government-issued fiat currency, are not governed by any central financial body and may be exchanged without going through a bank. There are dozens of different cryptocurrencies, and they all use different security measures and provide different benefits.

Cryptocurrency is a relatively new phenomenon, yet it may drastically alter the financial system and the way people see the cash.

According to Max Branzburg, VP of product at Coinbase Global Inc. (COIN), one of the leading crypto exchanges, “Cryptocurrency is a new asset class that is at the foundation of the cryptoeconomy,” which will see a new set of financial services, commerce, and global payments built atop this new technology.

According to James Putra, senior director of product strategy at TradeStation Crypto, cryptocurrencies’ dual nature as currencies and investable assets give retail investors access to “a world of global capital, as opposed to what they can access through the U.S. market.”

How to Invest in Cryptocurrency: The Fundamentals

Each of the dozens of cryptocurrencies now available has its own unique set of underlying properties. Keep in mind that your bitcoin investment might be useless the following day if it suddenly disappears. As a result, it’s crucial to be prepared with a plan and risk management skills before putting money into cryptocurrency.

Considerations for novice crypto investors include the platform’s transaction costs, the cryptocurrency it supports, the quality of its educational materials, and other factors. Briansclub has a really low platform cost, and it is one of the most trustable sites to invest and trade cryptocurrencies.

You may pick from a wide variety of cryptocurrency exchangers. It is possible to buy and sell cryptocurrencies on a variety of user-friendly, accessible, and secure platforms, including TradeStation, Coinbase, eToro, and Gemini.

Bitcoin and other cryptocurrencies have a far higher return potential than traditional investments, which has attracted many investors. However, you should think about the volatility of these assets and the potential impact of bitcoin on your portfolio. Bitcoin’s price dropped to a 16-month low in May, about $26,000, before recovering somewhat. Putra recommends limiting your cryptocurrency holdings to 2-5% of your portfolio due to the market’s extreme volatility.

Bitcoin, like high-growth speculative tech equities, has fared well in an interest-rate-hiking climate because it is seen as a “risk on” asset. While there has been an increasing link between Bitcoin and the stock market, particularly the technology sector, in recent months, some analysts predict that this will decouple.

William Cai, partner and co-founder of Wilshire Phoenix, adds, “Bitcoin has merged into the hazardous asset class.” The strong correlation is an indication of the asset class maturing, he argues, and investors should expect a de-correlation in the longer term.

As a further hedge against inflation, Bitcoin may appeal to investors. Putra argues that cryptocurrencies might serve as an alternative to bonds since bond rates are falling behind inflation.

“Because of the low interest rates across bonds, there is a reshuffling of capital on a global level out of bonds and into other assets that are more inflation-protected,” adds Putra. He also adds that the inflation protection provided by cryptocurrencies like Bitcoin and Ether helps to counteract the volatility of a crypto portfolio.

What to Think About Before Investing in Cryptocurrency

To put it bluntly, cryptocurrency investments are a huge gamble. Investors might lose a lot of money very quickly if they join the market at the wrong moment, despite the fact that there are plenty of success stories out there.

Another danger is that the future of cryptocurrency regulation is still being determined, which is not the case for other major asset markets. The United States, Australia, and Canada are among the nations that have so far allowed Bitcoin to be used more or less freely. Bitcoin has been recognized as legal money in El Salvador. China has effectively banned cryptocurrencies, while other nations like South Korea are pressing for rigorous regulation of the industry. In the United States, recent laws seek to tax cryptocurrency holdings.

Bitcoin and other cryptocurrencies were designed to function as a medium of exchange, but now only a small percentage of merchants will accept them as payment. Even while proponents of cryptocurrencies are in favor of using them commercially, authorities in many countries remain wary of this technology.

How to Earn Money Using Bitcoin

There are a number of strategies that may be used by investors to improve the value of their holdings and ensure a profit when purchasing cryptocurrencies. Like the stock market, the strategy to earn money investing in the crypto market is to purchase cryptocurrency at a low price and then sell it at a higher one.

According to Branzburg, “you may get more out of your money with bitcoin than with other traditional assets” due to volatility and chances that are unavailable with more conventional investments.

He initially suggests using stakes, which is an old and reliable technique. Through staking, you may earn more cryptocurrency by contributing to the asset’s network. Staking your cryptocurrency improves the safety and speed of the underlying blockchain. In return, the network provides you with more resources, much like the interest you’d earn on a savings account.

Cardano, Ethereum, Tezos, and Algorand are just a few examples of coins that provide incentives for stakes.

To add to that, “you can lend the assets that you have in your portfolio into decentralized finance, or DeFi, protocols to generate yield,” says Branzburg. By using DeFi, consumers may “plug into a worldwide liquidity pool,” as he puts it. In the decentralized money market, you may lend out your crypto assets to other users and earn interest in return.

Conclusion

Cryptocurrencies provide a fresh and intriguing paradigm for monetary exchange. However, experts stress that learning as much as possible about new digital currencies and the underlying technology is the first and most critical step to fully appreciate the opportunities and threats associated with them.

While it may be easier to calculate the intrinsic worth of a publicly listed firm, understanding how cryptocurrencies perform might assist you in avoiding buying at their top.