The Buyt Desk
Cryptocurrency has emerged as a viable global financial system. However, you should invest in cryptocurrency with caution. The value of a Bitcoin has fluctuated from Rs.3, 654, 284 on May 14 2021 to Rs.2, 972, 951 on June 14 2021. The market fluctuations are also seen with other popular cryptocurrencies like Ether and Dogecoin. The volatile nature of digital currency coupled with the absence of regulation demands you to be cautious while investing in cryptocurrency.
Consider The Following Aspects Before Investing In Cryptocurrency.
Invest if risk-taking capacity is high
The concept of a decentralized financial system is revolutionary and yet to penetrate the global economy. On May 19 2021, after the Chinese Banking Association refrained every Chinese bank to deal in cryptocurrency, the value of different cryptocurrencies eroded substantially. What’s more? A single tweet from Elon Musk can put the value of cryptocurrencies in a whirlwind. Though a good gain can be expected from digital currencies in the long run, sudden shocks can cause an incredible loss of wealth. If you can financially sustain such high volatility then only choose to invest in cryptocurrency.
All that glitters is not gold
There has been much apprehension about cryptocurrency. However, once it gained traction, many supporters have emerged. These investors, who can gain from the market expansion of cryptocurrency, have become its proponents. They advance the idea of investing in cryptocurrency strongly. Do not be carried away with these voices. Instead, evaluate the cryptocurrency market in comparison to your financial goals and then choose to invest.
Invest less in the crypto market
As we have discussed above, the volatility of the cryptocurrency market is quite high. If you invest a significant amount, then in case of a shocking fluctuation the loss of wealth can be humongous. It is best to invest only 5 to 10% of your portfolio in the crypto market. In this way, you will be able to endure if there are losses.
Tread with caution from fraudsters
The role of a regulatory or controlling authority is to safeguard the interests of the involved parties. Since the crypto market is unregulated, the chances of fraud are high. Fake websites are defrauding people by alluring them into forged investment options. On June 10 2021, Haryana Police has arrested four fraudsters claiming to possess bitcoins in a digital wallet. They were fooling investors by giving false hope of huge monetary gains. Such frauds can be commonplace in the crypto market, therefore, take all possible precautions before investing.
Regulators may flutter the crypto market
The regulators of the finance system worldwide are watching over the movement of cryptocurrencies. The Chinese Banking Association will not be the last regulator to take any action against the crypto market. Currently, a bill by the Indian Government is underway to prohibit private cryptocurrencies and allow only State-run cryptocurrency. A jerk from regulatory bodies in the major global markets, like the US, can leave the crypto market topsy-turvy. Thus, put great thought and caution before investing in the crypto market.
