Investing in cryptocurrency can be tricky, meaning that the market is highly volatile and there can be a huge risk. On the other hand, it can prove to be very profitable also.
There is no particular Yes or No answer for the question, but while you invest, you can keep in mind the pros and cons. Let’s take a look:
The Pros and Cons of Investing in Cryptocurrency
CON: The digital market has been volatile since it’s birth. In 2017, the price of Bitcoin hiked up by a huge margin. There can be a difference of hundreds of dollars in a single day. The risk of losing your money is huge, and might not be the wisest decision to take.
PRO: There is a positive face of optimism also when it comes to investing in crypto. The market is in its infancy and the most optimistic of investors are projecting future prices that would make buying any of the major cryptocurrencies (even at the height of 2017) a good bet.
CON: Right now, Bitcoin is the top coin but we have no guarantee if it’s here to stay or not. This makes more sense for the countless less popular coins with smaller market caps. This gives rise to a huge risk in betting on a certain coin.
PRO: Even as it may seem right now, that cryptos aren’t much of a big deal for some audience, in the future cryptocurrency can be an important medium of exchange and store of value. That makes it a good long-term bet. Meanwhile, for day traders, cryptocurrency is a very risky (but potentially rewarding bet).
CON: There are people in the market with real low-risk tolerance; they tend to pull out of a loss while the market is correcting or slumping.
CON: Major countries like the U.S., Russia, and China are interested in the crypto market. Currently, cryptocurrency trading is legal in the U.S., Russia, and China, and the U.S. and Russia have been fairly friendly with the crypto environment but remember governments can influence the price.
PRO: The market is volatile, if you time your trades correctly, you can often buy high low and sell high. There is money to be made.
In the U.S. cryptocurrency is regulated and if one holds it for investment, it is taxed as an investment property. This is good. This way you can keep a tally of your trades, treat them as capital gains, and then report to the IRS just as with any capital investment.
There are certain risks in cryptocurrency but it is the most alluring asset of the 21st century. The revolutionary underlying blockchain technology is paving its way for a long future. You have to accept the fact that there can be a thousand reasons for you to be interested in cryptocurrency but also enough reasons to think your investment through.
