Cryptocurrency is a moment. The unprecedented performance of the crypto market in 2021 marked the end of the crypto generation phase and accelerated the mainstreaming of crypto assets. Many altcoins outperformed Bitcoin. In fact, according to Visual Capitalist (dot com), Bitcoin returned 59.8% last year and the market capitalization of cryptos increased by 187.5%. Cryptography, once a mere water cooler conversation, is now at the heart of the world. Begging the question, have you reached a turning point? Is it time for everyone to get in and start trading crypto?
Cryptocurrency market is slowly tightening regulations
One good sign that the crypto market is ready to become more mainstream is the new regulations that the government is enforcing. Today, the crypto market is more transparent than it was five years ago. In addition, governments around the world are making considerable efforts to regulate the industry, making investment safer. For example, the Chinese government has promoted blockchain technology to increase transparency and combat fraud.
The White House last week issued a presidential directive containing new regulations for US traders. Biden’s order requires the government to investigate the risks and benefits of cryptocurrencies.
Orders focus on six key areas. Financial stability, consumer protection, illicit activity, financial inclusion, innovation, and US competitiveness. The administration also plans to explore the concept of the digital dollar.
However, the jury is still considering whether this order will benefit the industry and those who want to invest in cryptocurrencies.
Despite the bear market, brokers continue to offer competitive interest rates as new investors increase their interest in crypto and US regulatory agencies are working on the regulatory framework.
Many banks and large corporations make buying and selling Bitcoin more accessible
Another sign that cryptocurrencies are becoming mainstream? Businesses are more open to accepting cryptocurrencies as a payment method. According to a 2022 report from Visa, 73% of the 2,250 companies surveyed believe that digital payments are the basis of 2022 growth. About a quarter say they are ready to accept cryptocurrencies as a payment method.
More than 2,300 US companies, including Microsoft, Whole Foods and Starbucks, are currently accepting Bitcoin. In fact, over 15,000 companies around the world buy Bitcoin as a payment method.
Consumers are reacting. According to PYMNTS / BitPay, 72.2% of Gen Z and 63.8% of millennials surveyed already use cryptocurrencies as their payment method.
What do new traders need to understand about cryptocurrencies?
Access to this market may prove to be beneficial to everyone, but there is a problem if the transaction is too accessible. It can be dangerous if new traders enter the crypto market and do not fully understand what they are buying. Investors need to have the necessary knowledge of what they do before they can do it.
In reality, it’s all about risk. Traders need to be fully aware of what they are doing and the consequences. Unfortunately, transactions are often placed dreaming of returns and without considering that things may go wrong.
No one can avoid bad deals. Therefore, all investments should be carefully evaluated. Whenever you make a deal, it’s a good idea to focus on the first possible loss. This limits exposure and these losses are at a reasonable level.
Another thing most traders miss completely is the importance of creating and sticking to a trading plan. Knee jerk decisions can be too emotional and should be avoided. However, pre-planning all transaction decisions based on testing and statistical data can be very helpful in limiting losses from bad decisions.
Today, there are too many traders dealing with cryptocurrencies like any other market. Most of them feel lost in the bear market drawdowns observed since January. As a result, they face difficulties in predicting what will happen next. This is exactly why you need a plan. Once you have tested your investment strategy to see what the results have been during the volatility period, you can make informed decisions.
Cryptocurrencies are preparing for another boom
The most attractive time to enter a market with cryptocurrencies may seem after a large rally. When the rally stops and the market falls, many are confident that it will rise again, so I think “it’s back now, so it’s time to dive in.” The problem is that there is no certainty about how the market will move in the future.
Yes, it could resume rising, but it could continue to fall or lie sideways for years. This obviously doesn’t mean you shouldn’t invest in crypto. It simply means that you need to choose an investment approach that can make a profit regardless of future market movements.
Cryptocurrencies offer great revenue opportunities, but the classic buy-and-hold approach may not be the best approach to seize them. Instead, trading with strategies can take advantage of the considerable volatility of these markets and the many inefficiencies that many of them still have and can prove to be a much better option. There is sex.
Of course, adopting such an approach requires skill and knowledge. That’s why studying and learning before you start investing is the key to success with cryptocurrencies. Playing traders without the necessary preparations can lead to significant losses in all markets, including crypto.
Is it time to invest in crypto?
Currently, the market is volatile. The crypto industry has suffered a third market drawdown since the beginning of this year. After Russia regained $ 200 billion a day after invading Ukraine, the crypto industry again fell below $ 1.8 trillion in market capitalization.
As major cryptocurrencies have fallen from record highs, many believe that current prices will probably return to their previous highs, providing an important opportunity, especially for new investors.
I’m not a fortune teller, so I don’t even predict the future of the market, especially the explosion. I do not trade on the basis of expectations, personal opinions, or intuition.
Instead, I approach the market with a fully diversified portfolio of different strategies, manage risk appropriately, and limit losses even during periods of intense market drawdown.
If this is the approach you are taking to trade crypto, now is a good time to enter the market like any other time.
However, if you want to make money, stop the buy-and-hold strategy and choose a scientific and proven trading method. In this way, you are more likely to be able to seize opportunities in an environment as volatile as we are currently trading in.
Image credit: Provided by the author. Pexel; Thank you!
Has the trading cryptocurrency reached a turning point?
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