Have you ever considered investing in cryptocurrency? It’s important to understand what you’re investing in before you, well, invest. You wouldn’t just put your money in any kind of stock; you’d want to research the best stocks to invest in before committing, and the same goes for cryptocurrency.
Doing research is important when it comes to cryptocurrency. It can be a little tricky getting into it and understanding all the ins and outs of the industry. However, many people that have invested in cryptocurrency have seen a positive outcome for themselves and their cash and enjoy the extra money it can bring them.
The more you understand cryptocurrency, the more likely you’ll be able to know where to invest, when to take out, and how to manage your money overall. These are 5 things you should know before going ahead and investing in cryptocurrency:
1. Growth Rate of Crypto
Similar to stocks, crypto is always changing in value. It’s important to have a plan for how much you want to invest in cryptocurrency. A good rule of thumb is to never invest more than you’re willing to lose. That goes for any investment you make and it works for cryptocurrency, too.
There are over 3,000 cryptocurrencies available for people to invest in. That’s a lot to choose from! That’s also a lot of currency to keep track of. Do your research and choose a few you feel are a good fit for you.
Rather than putting all of your eggs in one basket, choose a few different cryptocurrencies and invest a little in each one. You’ll want to diversify your crypto portfolio in case you happen to lose in one, you aren’t losing it all; you have others you can depend on to provide you with gains.
One of the most popular cryptocurrencies is Bitcoin. You can actually watch the rise and fall of the Bitcoin price index to see when it’s a good time to invest.
2. The Best Time to Purchase Crypto
Unlike the stock market that’s only open during certain hours, the crypto market is open 24/7. So you can invest whenever you’d like. But there must be better times to buy compared to others, right?
In fact, Crypterium suggests purchasing Bitcoin specifically on Sunday or Monday for the best return. The reason? Simply because that’s typically when Bitcoin has the lowest prices during the week. Similar to stocks, with crypto, you want to buy low and sell high.
3. Where Will You Keep Your Crypto?
Whenever you have something of value, you want to keep it safe. That’s why people put their valuables in safes, have a secure bank to watch their money, and locked cabinets for important documents. But what about cryptocurrency? It’s not a physical asset that you can hold, so where can you put it so it stays safe?
It’s extremely important that you have a safe space to store your crypto before purchasing any. Some hackers have found ways to steal other people’s cryptocurrency that hasn’t been securely stored. That’s why it’s wise to have something like a crypto wallet to keep your investment safe. A crypto wallet is a software you can download and use to keep your cryptocurrency safe and locked up with passcodes and other hacker-blocking software. It’s great to have for peace of mind and it keeps your cryptocurrency safe!
4. How Much Time Do You Want to Invest?
There are those that simply want to invest in crypto and watch it grow. Then, there are those that truly invest their time into cryptocurrency by mining it. We’re not talking about mining in the ground, but rather, mining through a computer software system. Many people invest time and money into great computer systems that are capable of mining for cryptocurrency.
In fact, did you know that you could potentially get a tax break if you’re a crypto miner? Those who choose the crypto mining route need large computer setups, space, and pay a higher electricity bill to have those computers running all day. If filed correctly, you could get a tax break or a deduction for the materials you use to mine crypto.
You certainly don’t have to go that route, but if you’re really interested in getting deep into crypto, mining is a cool way to get involved with it.
5. Crypto Taxes
One of the most important things to keep in mind with cryptocurrency is the taxes that come along with it. Many people often ask: do you have to pay taxes on your cryptocurrency?
The answer is both yes and no. If you invest in a cryptocurrency and end up with a loss for that year, you don’t have to pay any taxes on it. However, if you gain anything in your crypto investment, then you will have to pay taxes on it.
The next question people often ask is: how much do I have to pay in taxes on my crypto? That’s where it’s helpful to have a crypto tax service help you calculate that exact amount. Crypto taxes can get complicated, so it’s helpful to have an expert that understands the ins and outs of cryptocurrency.
Bank of Korea Head Says Cryptocurrencies Have No Intrinsic Value
The head of the Bank of Korea, Lee Ju-yeol, said that Bitcoin and other major cryptocurrencies lack intrinsic value. However, he believes that all assets will continue to experience significant price fluctuations.
Price Surge Because of Pro-BTC Institutional Investors?
The chief of the Bank of Korea said cryptocurrencies, including Bitcoin, do not possess inherent value. In a recent news report, Lee Ju-yeol blasted the highly volatile nature of the digital asset industry.
“There is no intrinsic value in crypto assets,” said BOK Gov. Lee Ju-yeol at a parliamentary session on 23 February.
The news report quoted lawmakers asking BOK’s chief if the recent surge in the price of BTC is temporary or not.
“It is very difficult to predict the price, but its price will be extremely volatile,” Ju-yeol added.
The bank executive has also said that the recent rally in Bitcoin’s price followed by other significant digital assets may be led by multiple factors. Among them, Elon Musk’s Tesla – investing $1.5 billion. He highlighted that the latest price surge might be a continuation of institutional investors using Bitcoin as a hedge.
Ju-yeol also emphasized that BOK shouldn’t buy bonds issued by the country’s government directly. Otherwise, this would raise worries about fiscal stability and undermine the central bank’s trust.
Bitcoin Volatility Bringing Some More Hard Times For Investors?
The primary cryptocurrency’s volatility has been causing quite some troubles for both retail and institutional investors. This particular character of the digital assets has been a stumbling point for many, thus, causing some hesitations in whether to allocate funds in it or not.
BTC’s price managed to initiate another notable surge during the last couple of months, marking a consequent all-time high. Just a few days ago, it skyrocketed above $58,000, dragging other altcoins like Ethereum behind it for a while.
However, almost immediately after its upgrowth, BTC suffered a significant correction, settling unsteadily around $50K as per the time of the writing. As a result, the cryptocurrency market capitalization lost more than $300 billion in two days.
Interestingly, JPMorgan strategists said recently that Bitcoin’s illiquidity could bring more problems. Analysts from the US multinational banking institution argued that BTC is in a liquidity shortage, warning investors that the primary crypto-asset could suffer another price drop.
Featured Image Courtesy of WSJ.
Cross-chain bridges and DeFi integration are pushing these 3 altcoins higher
The cryptocurrency market is showing signs of progress following a multiday sell-off that saw the total market capitalization drop by more than $400 billion as Bitcoin’s (BTC) price briefly fell below $46,000.
While the majority of altcoins have entered a consolidation phase that includes a retest of underlying support levels, several projects have started to regain lost ground after new developments reignited investors’ optimism.
Cardano’s ADA started the year with a bullish spark that saw its price increase 624% from $0.165 on Jan. 2 to a high of $1.20 on Feb. 20. This week’s sharp correction pulled the price to a swing low at $0.80, but it is clear that traders bought the dip.
Since hitting a swing low at $0.80, ADA’s price rallied 30% to $1.05 following the news that community members at Venus Protocol had approved a proposal to bring ADA to the Venus mainnet.
— Venus (@VenusProtocol) February 23, 2021
VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for ADA on Feb. 14, prior to the recent price rise.
The VORTECS™ score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.
As the chart above shows, Binance introduced staking on Feb 10., and the VORTECS™ score for ADA rose to a high at 88 on Feb. 14
On Feb. 9 the Matic network rebranded to become “Polygon” as part of a strategic change to become a layer-two aggregator. The move was done in response to the growing momentum of Polkadot and a desire to build an interoperability protocol on top of Ethereum.
High gas fees on the Ethereum network have increased the need for layer-two solutions, and Polygon has emerged as one of the top solutions with projects like Aavegochi and Golem already operating on the protocol.
The rebrand helped lift the price of MATIC from $0.07 on Feb. 9 to an all-time high of $0.197 on Feb. 20 before the market downturn pushed it back down to $0.111 on Feb. 23.
Since that time the MATIC has recovered 62% to trade at $0.16 as the community and total value locked on Polygon continue to grow.
Stacks (STX) was the breakout star on Feb. 24 as the layer-one blockchain solution designed to bring smart contracts and decentralized applications to Bitcoin saw a record $166 million in trading volume that elevated STX to a new all-time high of $1.17.
Excitement for the project comes after the Feb. 23 announcement that STX holders can now participate in delegated staking from the Stacks wallet, allowing them to earn BTC rewards.
According to data from Cointelegraph Markets Pro, market conditions for STX have been favorable for some time.
As seen in the chart above, the VORTECS™ score for STX hit a high of 87 on Feb. 23, around 30 hours before the price increased 75% to its new high of $1.17.
Interoperability, cross-bridge solutions and staking have emerged as drivers of growth that help incentivize investors to hold their tokens and also attract new participants to old and new blockchain projects.
Following the recent market downturn, it’s clear that projects that offer tokenholders multiple ways to earn a yield and operate across separate blockchain networks are beginning to stand out from the rest of the field.
Former London Stock Exchange Group CEO Urges UK Government to Explore Cryptocurrencies
The former CEO of the London Stock Exchange Group, Xavier Rolet, has advised the UK government to look into cryptocurrencies and SPACs to minimize the adverse impact of Brexit. In a recent report, Rolet claimed that the UK has trailed behind other countries in both aspects.
The UK Should Turn To Crypto And SPACs?
Born in France, Rolet is a businessman and the Chief Executive Officer of the London-based credit-focused asset management firm CQS. Before assuming this position, though, he served as the CEO of the London Stock Exchange Group and was named as one of the 100 best CEOs in the world in 2017 by the Harvard Business Review.
In a report cited by Bloomberg, Rolet touched upon the potential consequences to the UK economy following the withdrawal from the European Union and the European Atomic Energy Community, better known as Brexit.
The executive believes that the UK has two viable options to consider if it wants to minimize the risks and help the nation flourish.
In the first one, he urged the government to “promptly consider the SPAC revolution.” Also referred to as “blank check companies,” these special purpose acquisition companies (SPAC) operate as shell corporations listed on a stock exchange with the idea of buying out a private company, thus making it public. Ultimately, this strategy eliminates the need to go through a traditional initial public offering (IPO).
While the US has seen significant adoption in the past year with a 10x increase in the raised funds compared to 2019’s results, the UK regulators have halted their progress on the London markets.
Rolet’s second advice involved digital assets as he noted that “all relevant UK government agencies should be resourced to thoroughly understand cryptocurrencies.”
With proper regulations, the crypto ecosystem could “place London and the UK at the center of a reputable and safe financial market.”
The UK’s Regulatory Approach To Cryptocurrencies
While UK’s regulators have hindered SPACs’ progress within the country, the nation’s financial watchdog, the FCA, has also been rather harsh against the cryptocurrency industry.
As of the start of this year, the Financial Conduct Authority banned crypto derivatives and exchange-traded notes (ETNs) to retail customers.
Additionally, the watchdog has issued several warnings to investors that they could lose all their funds if allocated in digital assets.
The regulator also announced that all UK-based digital asset businesses need to be registered with it but extended the deadline for applications to July 9th, 2021.
Featured Image Courtesy of TheGuardian
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