4 Reasons Why Investing in Cryptocurrency Is A Wise Decision in 2021
Two things that have dominated the world news in the past year, the COVID-19 pandemic and the rise of Cryptocurrency! While the former has proved to be damaging, the latter has been one of the biggest reasons many people have become financially independent. Just think about it, when was the last time you spent a week without hearing about the roaring prices of Bitcoin or read the business section of a news website without any article about how Elon Musk is tweeting about Dogecoin?
In the United Kingdom, the interest in coins such as Bitcoin and Ethererum has increased exponentially. According to the data available on Google Trends, the searches for cryptocurrency trade and investing in 2020 saw a rise of over 300 per cent, clearly showing that people are curious to know the hype and see it as an excellent opportunity to build wealth!
1. Positive Cryptocurrency Trends
A. Patient Investors Reap Rewards: The growing trend in cryptocurrency is that new traders have been involved as the prices have soared. Two or three years ago, the crypto industry was in chaos. Many large capital coins such as Bitcoin and Ethereum were struggling to move beyond a certain resistance level, making it too risky for smaller investors. However, today the trend has reversed, and people who invested money just before the pandemic hit the UK have seen their investment turn 3 or 4 times in just over 15 months!
B. More regulation is On the Way: While a lot of movement in the crypto industry still goes on unregulated, there are strong chances that the regulation will improve soon. For example, some Governments have already started introducing tax after seeing an opportunity to grow their revenue. Currently, one has to go through a standard Know Your Customer (KYC) process that allows transactional tracking and adoption of legislation.
C. Better Risk Assessment: Due to the volatile nature of cryptocurrencies, newer traders are often confused about assessing their risks. Large capital coins such as Bitcoin, Ethereum have seen wide swings in their prices, making it difficult for less learned investors to understand the risks. Today, however, there are plenty of analytical tools and economic research institutes that track, analyse and accurately assess trading and investing risks.
2. High-Risk and Higher Returns
Despite the high risks, there has been a 558% (from 2018) rise in people from the UK investing in cryptocurrency. There is no doubt that the risks involved in trading and investing in digital asset technology are high. But so is the possibility of getting returns, and that is why many people in the UK are willing to take the leap of faith and invest heavily. For example, just in April – Bitcoin had a low of $49,059 and managed to touch a new all-time high of $63,739; that is a swing of more than 35% in just two weeks! Furthermore, analysts from JP Morgan predict that Bitcoin could rise to $130,000, making it an attractive investment even if you start today! Essentially, the risks involved in crypto investing are the same as investing in Gold or Stocks if you begin without knowing how the markets work.
3. Global Acceptance – Can Cryptocurrency replace traditional Money?
A few years ago, the naysayers of crypto always stressed that you couldn’t even buy a cup of coffee with the coins. Today, however, the acceptance of crypto as a genuine mode of transaction has increased by leaps and bounds. From fast food to automobiles, various brands have started accepting Bitcoin as a legitimate mode of payment. In 2020, businesses such as Paypal, Xbox, Tesla led the way in normalising paying in crypto coins. On the other hand, many financial institutions such as Morgan Stanley, Goldman Sachs and Barclays have made it easier for their customers to invest in crypto in a case and secure manner. This trend will encourage more brands to treat cryptocurrencies as a legitimate alternative to traditional money.
4. Improved Cryptocurrency Security
The risks involved in holding digital currency are different to that of owning bonds, stocks or cash. Over the years, frauds and hacks have led to crypto investors losing a large chunk of their investment; these risks have reduced significantly, but as the technology has improved. Trusted corporations such as PayPal and Square have made it easier for people in the UK to buy and sell crypto securely without having to worry about losing their money to blocked transactions. With so much information available on the internet today, people are expected to make decisions regarding any investment in cryptocurrencies based on sound knowledge of the market risks and the technology.