Following cryptocurrency’s rapid rise in price and popularity, government regulators have begun scrutinizing cryptocurrencies more closely. Even though the legislative field has not caught up with the virtual currency field, enforcement actions have occurred, along with a renewed emphasis on regulating crypto activities and participants.
In the last few weeks, Bitcoin gained $1 trillion in market value, a record surge that’s helping bitcoin returns exceed those of traditional assets like stocks and gold. The volatile rise of Bitcoin has been attributed to speculators, corporate treasurers, and institutional investors. Crypto believers and skeptics are at odds for dominating narratives of the rise: the former believe cryptocurrencies are being adopted to curb inflation, whereas the latter fears a precarious mania riding on the back of monetary and fiscal stimulus.
However, it has been argued that assigning a market capitalization is not a fair representation since Bitcoin isn’t an entity. Skeptics argue investors buy into the cryptocurrency’s network only if it is backed by real-world assets such as government policies or the backing of a major currency such as the dollar.
Bitcoin Giants
The fundamentals of companies are going to become linked to Bitcoin’s movements because companies are suddenly becoming speculators on the side, and we’re going to be in bubble territory before we know it.
A rather cryptic tweet by Tesla CEO Elon Musk Friday appeared to defend the company’s decision, saying Bitcoins are “a less dumb way of using liquidity than cash,” but adding that the decision didn’t directly reflect his own thoughts.
It is possible that digital currencies will change society as we know it if they become mainstream. It’s believed that as cryptocurrencies become more widely accepted by merchants, they’ll increase in value. Earlier this year, Venmo revealed it would start accepting cryptocurrency, with its parent company, PayPal Holdings, doing the same. Further legitimizing cryptocurrencies are investments such as Tesla and Square in Bitcoin.
The growing popularity of cryptocurrency among large companies may be an excellent way to get into it at the very beginning, so to speak.
Bitcoin Investments
It is the uncertainty surrounding cryptocurrencies that poses the greatest risk. It’s difficult to predict whether cryptocurrencies will become mainstream in the future, as we’re in uncharted territory right now.
At the moment, cryptocurrency is not accepted by most businesses in the U.S. There are currently only about 2,300 U.S. businesses accepting Bitcoin as payment, according to a recent study from Fundera. In the U.S. alone, there are more than 30 million businesses. That’s a very small percentage of all businesses that accept cryptocurrency.
Whether blockchain-based cryptocurrencies become more popular among investors or merchants, their success and long-term viability are dependent on merchant acceptance.
Volatility In Bitcoin
In addition to volatility, cryptocurrency can also carry a high level of risk. Over the past few months, Bitcoin’s value has dropped by more than 80%, and it’s been involved in multiple reversals.
Although volatile markets aren’t always bad, they can be hard to handle as an investor. The present market for cryptocurrencies could leave you struggling for sleep if you’re the kind of person who is risk-averse.
The ownership of cryptocurrency itself entails risks as well. It is not the traditional stock market, but a crypto exchange that allows you to purchase cryptocurrency directly. A digital wallet is also necessary to store coins, so be careful when using one if you don’t want to expose yourself to unnecessary risks. It is possible to hack your wallet, and you lose access to your investments if you forget your password.
Powered by both artificial intelligence and blockchain, Bitcoin Rush utilizes both to create value. Artificial intelligence enables the robot to learn from data and maintain performance in dynamic markets. In contrast, blockchain allows for a transparent trading environment. It facilitates bitcoin trading for everyone.
Bitcoin: A Risk Worth Taking?
If you have enough money to spare and are willing to take on a bit more risk, you might consider adding cryptocurrencies to your investment portfolio. If you’re investing, make sure you’re only investing what you can afford to lose, and carefully consider the rest of your portfolio. In that way, if cryptocurrency crashes and burns, you’ll have plenty of other solid investments to fall back on.
You should decide carefully if you are going to invest in cryptocurrency if you do decide to do so. It’s easy to see why Bitcoin is the most popular cryptocurrency, but it is not the only option. So make sure you research digital currencies before investing to decide which is right for you.
Though cryptocurrency is becoming increasingly popular among investors, it might not be a good investment for everyone. In the case of strong investments throughout your portfolio, you might be able to gamble on crypto if you are comfortable with the risk. If worse comes to worst, it’s smarter to cut your losses for now.
To Sum Up
Bitcoin has become a sought-after store of value that’s practically replacing gold much faster than anticipated with its runaway success. Since the COVID-19 pandemic, Treasury bonds and gold have been lagging. Both assets have demonstrated a strong correlation over time. The downside to Bitcoin is that it thrives on fiat volatility. Nonetheless, all of these figures can be regarded as mere speculation. Nevertheless, bitcoin has now spent several years tumbling down, weathering several bumps in the road and kerfluffles within the industry that often came as the first domino in bringing its price tumbling down. Rather, it has soared even higher for it.
