on the crypto
The frenzy returned in January, when Bitcoin surpassed $ 30.000, followed by increases of $ 10.000 in the following months. Cryptocurrency fans immediately minted their beloved digital currency as digital gold. On April 13, 2021, the price rose to $ 63.503,46. However, the noise was muted the following month as the descent began.
By the end of May 2021, Bitcoin closed at $ 37.332,86, a 41% drop from its April peak. As of June 22, 2021, the world's most popular digital token is trading even lower at $ 30.801,27. Right now, the future is hazy.
If you still want to be a part of this world, you need to know four things before investing in cryptocurrencies.
1. Very risky asset
The collapse of May 2021 confirms that Bitcoin is a speculative and risky asset, not the ultimate hedge, as some argue. While its price history gives the impression of a winning investment, wild price swings accompany the asset. Furthermore, it has no intrinsic value. The price depends only on what another person is willing to pay for the digital token.
2. It is not a simple investment process
Don't invest in Bitcoin blindly. Learn the process first, such as how to create a digital wallet to store your token. Furthermore, Bitcoin is a bearer good. You will get a cryptographic key that only you need to know. Investors safeguard the keys on a hardware device or on a piece of paper on which the code (string of numbers or letters) is written. Do not lose or entrust the key to a third party, as you may not be able to recover your Bitcoins.
3. Greater legal risks
A potential risk factor for Bitcoin is its decentralized structure. Apart from the non-physical presence (digital only), no central authority supports the cryptocurrency. While investors are not obligated by institutions or regulators, there is no legal recourse in the event of ownership or transaction problems.
4. Government repression
The regulatory crackdown by governments is starting, so Bitcoin could sink further. China will stop virtual currency trading activities and shut down suspicious crypto-mining operations. US regulators are likely to come up with new rules to protect investors.
Cross cryptographic actions
Canadians now have an alternative to Bitcoin in the stock market. Hut 8 Mining (NASDAQ shares: HUT) now operates in Canada and the United States. The $ 628,28 million company engages in industrial-scale Bitcoin mining operations. Like Bitcoin, the crypto stock was on fire in early January 2021.
The final one-year price return of Hut 8 is 229,1%, although the stock also went haywire. The current share price of $ 4,64 is 65% lower than its peak of $ 13,18 on February 22, 2021. However, market analysts recommend a buy rating. They see a potential upside of 202% to $ 14 over the next 12 months.
