The world of cryptocurrencies has been hit by bad news, which makes many potential investors wonder if the space is too risky.
Worried about cryptocurrency? Try Blockchain
“Insane profits have been made about as much as losses in the industry. As a crypto expert, I would not advise anyone, at least someone who wants to try their hand at the industry, to lower their life savings in crypto, “said CryptoWhat’s Patrick Moore. “The risk is still quite high: 5% of your investment would be good, but not everything.”
There are certainly benefits to investing in cryptocurrency, but many investors may not have the mental makeup required to hold digital assets when they experience wild fluctuations in volatility. Jared Tendler, author of “The Mental Game of Trading” notes this FOMO, the fear of missing something can affect how people act and inspire them to make foolish decisions. With complex assets such as cryptocurrencies, there is also the danger of the Dunning-Kruger effect, which is the tendency for some people to overestimate their level of expertise.
“In the crypto market, this means that inexperienced investors / traders become overconfident because they are not aware of how little they know and therefore are not able to recognize their own incompetence,” said Trendler. “This makes them very vulnerable to losses in the context of other more experienced investors / traders.”
Although various currencies are quite volatile, the real promise of crypto in the technology lies behind these currencies. Blockchain’s transformative potential remains untapped. While individual cryptocurrencies such as Bitcoin and Ethereum can fluctuate wildly in value and create high-risk / high-reward scenarios, the technology behind them has far more potential to be concrete rather than speculative.
Investors who are interested in entering the crypto area, but who are not quite ready to take the step on a risky digital asset, may instead find exposure to the innovative technology behind crypto in Invesco Alerian Galaxy Crypto Economy ETF (SATO) and Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF (BLKC)who both invest in the equity side of cryptocurrencies.
Even traditional financial areas see the potential benefits of crypto-technology, with governments seeking best regulatory practices. While crypto has been on the move, blockchain-specific corners of the market, such as gaming, have performed well. In a statement, shareholders, Animoca’s co-founder and CEO Yat Siu, wrote that “current market conditions will not kill Web3, the open meta-exchange, NFTs or cryptocurrencies.”
For more news, information and strategy, visit the Crypto Channel.
