How to invest in cryptocurrency while avoiding market volatility
The cryptocurrency market is one of the most volatile markets in the world. Anyone who has seen the value of their portfolio drop 50% overnight knows this too well, and it is a scary place. Early adopters have proven that resiliency is the key to success in this industry, with Bitcoin’s recent surge to $ 64,000, but at enormous risk. And that doesn’t suit most.
It’s natural to feel left out when everyone seems to be investing money in the still elusive cryptocurrency market, especially now after the huge sell-off has brought prices down to ‘affordable’ levels. Fortunately, there are workarounds that can allow you to stay involved in this market without diving directly into its volatile sector. Read on to find out how!
Investing in Blockchain Technology
Cryptocurrency is just one facet of the global dominance of blockchain technology, which has turned the concept of decentralization into reality. One of the main points of difference in cryptography is that all transactions are peer-to-peer, which allows the community to participate in the network through mining or staking. This sums up an idea of decentralization: a world without banks or financial institutions taking people’s money.
But there is more to decentralization than it seems. In the world of blockchain technology, any digital application can become free from third parties using smart contracts. The Ethereum blockchain is known to be the first platform to use and enable anyone to develop decentralized applications based on smart contracts, a feature that has found use in digital avant-garde industries, such as technology, games and finance.
Many other blockchains, including Cardano, offer the same functionality as Ethereum, making creating dApps more accessible than ever for anyone. As a result, there are many blockchain-based applications online, from games to supply chain management systems and even financial services. These include NFT marketplaces like Pixura and Dapper Labs, government platforms like Voatz, and even marketing solutions like Madhive and social media platforms like Steem.
Blockchain technology has its place in the future, so if you don’t want to invest money in volatile investments, supporting the real product (in this case, blockchain-based applications) may be an optimal alternative. .
Investing in Cryptocurrency Companies
While it’s unclear how much Bitcoin will be tomorrow and two years from now, cryptocurrency isn’t expected to turn to dust anytime soon. Many companies have been created to support crypto ownership, including exchanges, wallets, and even manufacturers of mining rigs.
Recently, a popular crypto exchange and wallet platform, Coinbase, went public with a $ 99 billion IPO– a testament to its relevance in today’s financial situation, which drifts between the world of fiat and digital currencies. Cryptocurrency-related businesses are expected to grow in tandem with the industry. While there are risks in terms of government regulations, this is no different from a regular IPO, which usually comes with a fair amount of uncertainty. It’s a great way to continue to be involved in the cryptocurrency industry without risking losing everything due to volatility.
Stable and anchored parts
The world of altcoins has expanded far beyond the realms of Ethereum – there are thousands of coins on the market, each with a unique value proposition for each investor. In particular, people who are not big fans of market volatility might fall in love with Stables and Pegs.
Stablecoins are cryptocurrencies linked to an external fiat asset, such as USD or EUR. A reserve of funds supports each coin to ensure the credibility of its value. Since fiat currency does not undergo extreme value adjustments over a short period of time, stablecoins can maintain near-permanent stability. A popular example is Tether (USDT), which investors often use to convert their coins as a hedge against the volatile market without leaving the crypto economy.
On the other hand, anchored coins follow a similar principle: they are pegged to an external asset, but an algorithm can allow them to stay anchored at a particular price. For example, The People’s Reserve (TPR) is an anchored coin linked to the last highest price of gold. So even if gold were to lose value, TPR won’t!
Due to the stability of the stable and pegged coins, there is very little to no risk of losing money by investing in these assets. But how do you make money? There are a number of ways, the most popular being staking, a process where you leave coins on the blockchain for a period of time to generate interest over time. By doing so, you will be able to enjoy fixed annual returns without the nervous episodes of playing in the volatility game through coins such as Litecoin (LTC) and Ripple (XRP).
Traditionally, investment funds are vehicles that pool the money of several investors and trade on their behalf. The benefit is then shared at all levels, depending on the strength of each person’s contribution. For example, if your investment is 2% of the entire pool, you can expect roughly the same share of the reward, less fees. There is little to no risk of losing money because if one coin goes bankrupt, other coins will be left to carry the team.
Due to the recent boom in cryptocurrency investments, many mutual funds have started to integrate cryptocurrencies into their portfolios. Joining one is a great way to indirectly invest in coins without dealing with volatility yourself. Naturally, crypto funds carry a bit more risk than traditional funds, mainly because any transaction with crypto will be subject to unprecedented peaks and troughs. But working with experienced traders should mitigate as much risk as possible.
The cryptocurrency market is tempting to get started– but it’s not for everyone. These alternative investment options will allow you to participate in the crypto boom while avoiding the emotionally draining volatility that plagues the industry. And remember, although these are less risky, they are still investments; careful consideration is recommended before embarking on a