The cryptocurrencies are consolidating as an asset class for investment. However, although they have features of the commodity markets, they keep many differences with the so-called traditional assets class. Therefore, for those who will invest in cryptocurrencies, it is important to consider regulatory aspects, concerning volatility and security, for example.
Here are 12 aspects inherent to cryptocurrencies for those who want to invest in them:
Crypto regulations are not yet fully defined
The U.S. is leading the implementation of regulatory guidelines for cryptocurrencies, aiming the protection of consumers. Around the world, countries adopt their own internal regulatory policies, but the decisions of global players like the U.S. help setting some standards.
Diversify your investments
Volatility is still a feature of the cryptocurrency digital asset markets. Therefore, you must consider this aspect when defining the percentage to be allocated to this class of investment assets. Experts recommend targeting 2% to 5% of your wallets in crypto, but this varies according to the risk aversion and investment term.
High and constant volatility
Keep in mind that the cryptocurrency market is unpredictable, with values fluctuating fast and constantly. Thus, it is still difficult to use these currencies for any type of spending, although there are already solutions from companies that allow this. In addition, it is not yet possible to pay salaries in bitcoin, for example, because besides the volatility, local regulations typically do not allow this.
Caution to avoid blows
As cryptocurrencies are fully digital and do not have a central deposit, you can lose the entire account balance if appropriate measures are not taken. For example, a computer crash without a backup could destroy a cryptocurrency stock. It is important to note that almost 100% of the times this occurs, it is an oversight of the holder and not a fragility of the blockchain of a particular cryptocurrency. In more than ten years of existence, the bitcoin blockchain has never been compromised.
It is also important to know that all crypto trading is widely deregulated, which means, that there are no regulatory protections available. Therefore, it is essential to research a lot and choose a regulated platform to carry out your transactions.
Stablecoins or Bitcoin?
The difference between stable currencies, known as stablecoins, and the bitcoin, is that they are issued by exchanges or other issuers and have the option of being backed by fiat money, such as the dollar, in a ratio of 1:1. They can still be backed into other assets, such as diamond and gold.
Beware of speculation
The cryptocurrencies are a class of assets like any other, subject to highs and falls. In addition, each cryptocurrency has a different purpose and vocation. For that reson, you should research well on a cryptocurrency before choosing it as an investment asset. And escape from hypes and valuation bubbles. Therefore, reasonable measures need to be taken, as this will result in experience, and experience will result in better decision-making.
Cryptocurrencies are the money of the future
If the Internet, launched in 1994, brought us where we are today, imagine what this simple code called Bitcoin could do for the global trade. Therefore, many believe that digital currencies and blockchain are the future of finances, and their use will soon become as ubiquitous as email. Signs that this is about to happen is Facebook ads, which launched Libra and JPMorgan, which created their own stablecoin for use in international payments and agreements, allowing faster and lower-cost transactions.
OTCs for large investments
In order to buy amounts higher than US$ 20,000 in crypto, it’s more advantageous to turn to OTC platforms instead of standard exchanges. An investment of this sum in an exchange will cost the investor 5% to 9%. In this way, the purchase in OTC provides the investor with greater control of their costs.
Beware of promotions to invest in cryptocurrencies
Always be careful about promotions that look too good to be true. Generally, they really aren’t. The false promise can happen because some exchanges may charge huge fees or make it difficult to withdraw funds after depositing the money.
Buy and store safely
One of the fundamental tips for those who will start investing in cryptocurrencies is: learn how to buy and store safely and know at which stage the adoption cycle of this technology is currently being carried out. The falsification of accounting records is almost impossible or at such a large cost that it makes it unfeasible. The security problems that arose in this area were about the existing technology that was not adequately protected and isolated.
Investing in cryptocurrencies is hedge strategy
The cryptocurrencies are ideal as diversification assets. In addition, they do not have correlation with traditional interest and stock markets. Thus, in a major international liquidity crisis, they would be protected from the oscillations that would be common in traditional markets.
Cryptocurrencies outperform other assets
Historically, cryptocurrencies have exceeded return levels of other assets. A US$ 450,000 bitcoin investment five years ago would be worth US$10 million today. Investors should always look at the long term in this market.
Given these tips, it is important to say that Transfero Swiss provides cryptoassets custody services. In this way, the investor can leave in the hands of a reliable company to keep their digital assets. In addition, the company has alternatives of allocation of digital assets seeking to overcome the market. Learn more about the company’s products.