The value of Bitcoin has dropped below $30,000 – less than half of what it was at its peak last November, according to Coinbase. Crashing crypto markets have cost investors hundreds of billions in value.
Since the beginning of this year, Bitcoin’s price movement has closely mirrored that of the Nasdaq, a benchmark that’s heavily weighted toward technology stocks, according to an analysis by the data firm Arcane Research.
The recent trends have shown that crypto can be as volatile as stocks. Understandably, this raises the question: Do cryptocurrencies still represent a good investment option, and where is the market heading?
What if I told you it wasn't all doom and gloom? In fact, young investors keep choosing crypto over stocks, despite the bumps. And there could actually be some interesting benefits of crypto's volatile nature. Now, let's dive deeper.
Cryptocurrencies Can Meet Young Investors’ Demands
Although crypto has slowed down its pace in the last few months, it can attract millions of young investors (mostly aged 18 and 34). It’s because crypto can give what the millennials and Gen Z want the most – speed, tech-savvy solutions, easy access, and the ability to invest with little money.
Moreover, investors do not necessarily need to have a strong financial background – most of the people in the crypto space right now aren’t financial specialists. A nationwide survey published by the University of Chicago found that more than half (55%) of crypto traders do not have a college degree.
Learning about crypto is much easier since the whole community can connect via the most popular social media platforms such as Twitter, Reddit, or Discord. When it comes to stocks, people would have to learn how to open a brokerage account, participate in trades, and how all of that connects to gold and silver reserves. Understandably, this scares a lot of potential investors away, given that there is so much that can go wrong.
Crypto goes beyond being a way of investment – it opens the door to a whole new world, which is something that stocks cannot do. Facebook’s rebranding to Meta Platforms, Snoop Dogg’s Snoopverse, and luxurious brands such as Burberry and Balenciaga have brought attention to the metaverse.
One of the most notable ways crypto and the metaverse intersect is through non-fungible tokens (NFTs). They allow users to buy and sell virtual goods, services, and experiences within the metaverse. Since NFTs cannot be modified, they can be used as an immutable form of digital ownership. If you want to purchase property within the metaverse, for example, you will need to use cryptocurrency to buy the real estate NFT.
There is Potential in Crypto’s Volatility
For some crypto investors, the appeal of cryptocurrencies lies in volatility. Strange, right? But it is really a trader’s heaven. Volatility allows investors to develop strategies like buy low and sell high, which creates the possibility for astronomic returns. Therefore, cryptocurrency trading is fast becoming an increasingly attractive option for people wanting to achieve financial independence and freedom from the daily grind of office hours.
Last November, a group of 6,741 respondents was quizzed about resigning from a job due to crypto gains in 2021. 4% of the respondents disclosed that they had quit their jobs to pursue crypto careers over the past year. With effective strategies, crypto day traders can start building wealth fast. Bear in mind that the crypto market is open 24/7, unlike the stock market. So, being a full-time crypto trader requires all-day commitment, patience, and non-stop analysis of patterns.
Although the crypto market has been under pressure, advisers say the turmoil is a good time for investors to rebalance their portfolios and perhaps get a better handle on which coins may or may not have long-term value. Crypto’s volatile nature also offers a chance for people who want to dip their toes in the crypto water. If you want to start your crypto journey, buying the dip gives you better returns in the long run.
Experts continue to tell us each time there’s a price swing – whether up or down – emotional reactions can cause investors to act rashly and make decisions that result in heavy losses. No matter what type of trader you are, pinpoint your clear goals: They will help you prevent Fear of Missing Out (FOMO) and unwanted results. Needless to say, never invest money you cannot afford to lose.
What’s in Store for the Future of Cryptocurrencies?
According to a new survey, 80% of institutional investors believe that cryptocurrencies will overtake traditional investment vehicles. We will see mass adoption within the next decade. Only when regulations can protect investors can the crypto market reach its full potential.
Most of the trading in the crypto world today is not regulated by any federal authority. However, this has started to change as cryptocurrency has gone from an obscure fad to a much more mainstream form of investment, and people leveraging crypto have reached almost 300 million.
For example, the regulatory body of Canada, the Financial Transactions and Reporting Analysis Center (FINTRAC), has taken a big step to fight against fraud and money laundering activities. Crypto exchanges must meet Know Your Customer (KYC) compliance requirements in the same way as traditional financial institutions do. This way, cryptocurrencies will be a healthy development for the industry and protect investors.
Furthermore, greater regulatory guidance could help reduce speculation among crypto assets. It means that regulation for cryptocurrencies will bring peace of mind to the wider markets – leading to greater investment in the industry.
As the crypto space becomes more regulated, we can expect to see large institutional investors, and their participation will benefit the long-term stability and growth of the cryptocurrency ecosystem.
The bottom line is that cryptocurrencies have a bright future ahead, and can help investors achieve financial freedom and multiply wealth. And there is not a single answer to the question whether volatility is good or bad – it completely depends on your personal risk appetite.