Crypto’s Woes: Is It Still Worth Investing In?
The crypto market is in a bearish mood today after the price of bitcoin dropped below $6,000 for the first time since December 2017.
The drop comes as investors are still reeling from last week’s news that Facebook had suspended its Libra project and other major cryptocurrencies on the crypto market have been on a downward trend for months now.
But despite all this, there are still plenty of reasons to be optimistic about the future of crypto as a digital crypto asset. Here are some things you should know about the state of the industry right now.
Are Cryptocurrencies Still Safe Investments? Experts Say…
The price of Bitcoin, the world’s largest digital currency, reached a record high of almost $20,000 per coin in December 2017. But since then, it has been declining rapidly, facing what we call a crypto winter. In fact, just days ago, it fell to about $6,500. So what happened? Why did people start selling off their Bitcoins? And why did prices begin to fall?
The prices of cryptocurrencies like bitcoin (BTC), ethereum (ETH) and ripple (XRP) have plummeted since the end of 2017. In fact, some analysts predict that the total value of all digital currencies could drop to less than half of what it was worth just one year ago. But despite the crash, there’s no denying the potential of blockchain technology. Experts believe that the world economy could become increasingly reliant on the decentralized ledger system.
So how much do you think the current prices of cryptocurrencies are worth? Let’s take a look at what experts had to say about the future of digital assets.
What Does This Say for Those Who Invested in Cryptocurrencies?
In an interview with CNBC, Peter Schiff, CEO of Euro Pacific Capital, said that he believes that the price of cryptocurrencies will continue to decline until they reach “zero.” He added that if governments around the world decide to ban or regulate cryptocurrencies, the prices would likely go down even further.
Schiff also pointed out that many people who became part of cryptocurrency investment were not prepared for the volatility that came along with them. He explained that most people didn’t understand the risks involved when investing in these types of assets.
Schiff went on to explain that while the price of cryptocurrencies may seem attractive now, it won’t always be so. He also noted that the price of gold, which was once considered a safe investment, has declined significantly over the years.
Is there any hope for crypto investors?
Despite the negative outlook for cryptocurrencies, there are still some positive signs. The number of new initial coin offerings (ICO) projects launching each month has increased by more than 50 percent compared to the same period last year. According to data from CoinSchedule, there were 1,921 ICOs launched in 2018 alone. That’s up from 1,329 in 2017.
However, the majority of those projects failed to raise enough money to cover their costs. As such, only about 20 percent of the projects managed to get funded.
Still, the rise in the number of ICOs is good news for investors because it means more opportunities to make money. Plus, according to a report published by the Wall Street Journal, the average amount raised by ICO projects in 2018 was $8 million.
That compares to the billions of dollars ($1.4 billion) that was raised during the first quarter of this year. However, the Wall Street Journal notes that the average size of the ICO projects that got funding in Q2 was $13.5 million.
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Are Crypto Exchanges Regulated? How Can I Avoid Getting Scammed?
Cryptocurrency exchanges are unregulated, meaning anyone can start one. And while many of those exchanges are legitimate businesses, others are scams. Some of these scam exchanges operate under names like Coinmama, Cryptopia, Bitpanda, and Coinbase. They promise big returns, but once you send your money, it disappears.
In addition, there are a number of ICOs that raise millions of dollars without having much substance behind them. Many of these ICOs end up being pump-and-dump schemes where the founders sell off their coins quickly and disappear.
And then there are the Ponzis. These are investment vehicles that don’t actually hold anything of value, but promise high rates of return. One famous example is the Bitcoin Savings & Trust, which promised customers 10% interest a month. When the bubble burst, customers lost everything.
So how do you avoid getting scammed? Here are four tips.
1. Do your research
Before investing, research the exchange. Look at reviews online, see what ratings the exchange gets, check whether the exchange is based in New York or another state with strong securities laws, and look at the track record of the CEO. If you’re buying bitcoin, make sure the exchange offers ways to buy directly with cash.
2. Don’t be afraid to ask questions
If an exchange doesn’t answer your questions, move on to the next one. There are plenty of reputable exchanges out there, and if they aren’t willing to provide answers, it could mean something is wrong.
3. Know what you are buying
When you invest in cryptocurrency, you’re not just buying a currency; you’re also buying into a whole ecosystem. For instance, when you buy Ethereum, you’re also purchasing access to smart contracts, decentralized applications, and other features built into the blockchain.
You should know exactly what you’re buying, so be careful before making any investments.
4. Use a brokerage account
A brokerage account will allow you to trade cryptocurrencies safely and securely. The best brokers offer 24/7 customer support, multiple trading accounts and low fees.
The bottom line
Investing in cryptocurrency isn’t easy. But as long as you follow our advice above, you shouldn’t have too much trouble finding success.
How Do I Get Started Investing in Cryptocurrencies?
If you’ve been thinking about getting involved in cryptocurrencies, it might make sense to jump in sooner rather than later. Crypto prices are down quite a lot since their peak in December 2017 and many people think things could go lower still. So what are the best ways to start? Here are three options:
1. Use an exchange
The easiest way to invest in digital currency is probably to use one of the exchanges where it trades. You deposit fiat currencies such as US Dollars, British Pounds, Euros, etc., and purchase coins with those funds. This gives you exposure to most major markets and allows you to trade without having to worry too much about technicalities.
To use an exchange, you’ll need to open an account. Most exchanges offer signup bonuses and promotions to entice new customers. Some even allow you to earn interest on your deposits.
2. Buy coins directly
You don’t necessarily need to use an exchange to buy cryptocurrency directly. There are plenty of places online that let you pay with credit cards or bank transfers and then convert the funds to coins once they arrive. These sites include CoinBase, Kraken, Bitfinex and Gemini.
This approach offers flexibility over exchanges, allowing you to choose exactly how much cash goes towards each coin. However, it does require you to manage your own accounts and you won’t benefit from any promotional deals offered by the exchange.
3. Mine your own coins
Another option is to mine your own coins. To do this, you’ll need to download software onto your computer, connect it to the internet and start solving complex mathematical problems. Once you solve enough of these problems, you can collect a reward in the form of newly minted coins.
Mining is competitive, but if you’re up for the challenge, it’s definitely worth looking at.
What Percent of My Portfolio Should Be Invested in Cryptocurrency?
There’s no right answer to this question. If you want to diversify your portfolio, feel free to allocate a small portion of your money to cryptocurrencies.
However, there are risks associated with investing in virtual currencies. One risk is price volatility. As we mentioned earlier, prices have fallen dramatically since their all-time high in late 2017. Another risk is hacking. Hackers have stolen millions of dollars’ worth of Bitcoin from exchanges around the world. And finally, there’s also the risk of scams. Many ICOs turn out to be fraudulent projects designed only to steal investors’ money.
So while it’s possible to profit from these digital assets, it’s important to remember that they aren’t suitable for everyone.
What Will Be The Future Of Cryptocurrencies in 2022 And Beyond?
It’s hard to say for sure. While the future looks bright for cryptocurrencies, there are still plenty of challenges facing them. For example, regulation remains a problem. Even though governments like Japan and South Korea have taken steps to regulate cryptocurrencies, others haven’t.
And then there’s the issue of scalability. Right now, blockchains are limited to handling just 7 transactions per second. That means it could take days to complete a single transaction. But as more people adopt blockchain technology, the demand for faster networks will rise. So eventually, we should see improvements in network speed.
But what about security? We’ve already seen hacks happen. What happens when hackers get hold of someone’s private keys? Or worse, what happens when hackers compromise a major exchange?
The good news is that many experts believe that the worst is behind us. They think that cryptocurrencies will become part of our everyday lives within five years.
What’s Bitcoin’s Future?
Bitcoin isn’t going anywhere. It’s too big to fail.
In fact, its value has increased by almost 1,000% since January 2018 alone. And even though it’s currently trading below $10,000, it’s still one of the most valuable assets on Earth.
That said, there are signs that the cryptocurrency market may be cooling off. After hitting an all-time high of nearly $20,000 in December 2017, Bitcoin lost half its value over the next few months. Since early February, it’s been hovering between $9,500 and $11,000.
That doesn’t mean that Bitcoin is dead. Far from it. It’s still one of the best investments available today. But it does suggest that the cryptocurrency craze might be coming to an end.
What’s Ethereum’s Future?
Ethereum is another story. Like Bitcoin, it was created in 2008 by Vitalik Buterin. Unlike Bitcoin, which is traded on centralized exchanges, Ethereum is traded on decentralized exchanges. This makes it easier to trade Ethereum than it is to trade Bitcoin.
As a result, Ethereum’s value has skyrocketed. From less than $1 at the start of 2017, it hit a peak of nearly $1,400 in mid-December 2017. Today, it trades for around $300.
This rapid growth has led to concerns that Ethereum is becoming too popular. If so, this would make it harder for new crypto companies to raise funds through ICOs.
There are other reasons why Ethereum could lose momentum. Some analysts worry that the number of ICOs being conducted using Ethereum is growing too quickly. As a result, the price of Ether could fall if investors begin selling their ETH holdings.
There are also questions about whether or not Ethereum can scale up fast enough to meet the demands of businesses looking to use it.
In Summary
So while cryptocurrencies aren’t going away anytime soon, they’re certainly facing some challenges right now. The good news is that these problems don’t seem to be slowing down the adoption of blockchain technology.
On the contrary, it seems like blockchain is gaining traction every day. Which is great because it shows that cryptocurrencies are here to stay.
