Is Crypto A Good Investment 2020?
Despite the widespread trend of cryptocurrencies devaluation in 2019, some of the coins and tokens have a great potential to offer a long-term return on investment.
Hence, crypto is a good investment in 2020. Investors should not pay attention just to the current crypto market prices. This index is highly volatile and may change rapidly within a few weeks.
For example, the dramatic drop in Bitcoin and altcoin prices in 2018 may have presented investors with great opportunities to buy the cryptos at lower prices. With the halving event fast approaching, the price of the flagship crypto may surge as it was the case with the previous halving events.
Cryptocurrency Market Overview
2020 has so far been quite interesting for the crypto sector and the financial markets. The COVID-19 pandemic has majorly affected the entire world threatening to pulverize even some of the major economies.
Looking at the crypto space, many commentators think the bear market is over as Bitcoin price has seemingly recovered from the coronavirus-induced crash of mid-March. The halving event is highly anticipated and the cryptos are constantly getting adopted around the world.
Interestingly, the Indian Supreme Court recently overturned the decision to ban cryptos made by the Reserve Bank of India (RBI) in 2018. Thus, cryptos can now become available to millions of people in India.
Additionally, the many central bank-issued digital currencies (CBDCs) like the digital Yuan have gained attention from the mainstream media. The United States Federal Reserve is now researching on the various uses of blockchain technology. Experts advise the Fed to explore the different possibilities of developing a digital dollar.
Russia, Ukraine, Japan, Sweden, England, the Marshall Islands, and other countries are looking to develop their CBDCs. Facebook’s Libra project (now known as Diem) has also encountered multiple alterations in recent months with companies like MasterCard, Visa, and Vodafone leaving the project. But, it is still unclear if the Stablecoin will launch in the second half of 2021.
How To Gauge The Crypto Market
With the many developments and continuous adoption of cryptos and the underlying blockchain technologies, experts believe that crypto is a good investment in 2020. But, before making any decision, investors should check the market capitalization.
The value of a cryptocurrency determines the level of interest of investors. A high market cap means that a huge volume of the cryptocurrency is participating in active transactions.
The higher the liquidity level, the faster the crypto can be sold at a particular market price. Some of the most popular cryptos like Bitcoin, Ethereum, and Ripple have a significantly high liquidity rate. Furthermore, trading activity on crypto exchanges shows the number of
transactions with various coins made over a particular period. Thus, it shows the real demand in specific crypto among traders.
Experts also advise investors to learn and observe to ensure that they select the best cryptos and the perfect entry points to this highly volatile market. Before investing, they should not trust one source of data but instead, review different sources to make an informed decision.
Investment diversification is important even int eh highly profitable markets. Thus, traders should never invest all their money into one asset. Portfolio diversification reduces risks of losses with some of the cryptos bringing profits even in an overly bearish market.
Top Crypto Investment Options
Many things are currently affecting the crypto sphere. Hence, it is quite hard to determine the best digital currencies to invest in.
But, Bitcoin still ranks at the top of the best cryptos to consider due to its market dominance and high volatility. Investors are optimistic that the imminent halving event will result in a bull rally.
There are more than 90% buyers and less than 10% sellers based on trader sentiment. Hence, more people are buying and holding the cryptocurrency ahead of the halving event. That makes bitcoin one of the best cryptos to invest in this year.
Has Ethereum has always been in the shadows of Bitcoin?
Bitcoin but has grown to become the second-biggest crypto by market cap is the most widely used altcoin. It is a promising investment in 2020 due to the several upcoming changes in the Ethereum network. ETH price has spiked just like many other cryptos.
Ethereum is aiming to move away from the Proof of Work (PoW) blockchain shifting to a Proof of Stake (PoS) network. Thus, ETH would be staked instead of mined.
The transition will potentially make Ethereum the most secure crypto globally. That transition is expected to happen later this year and it may lead to a major rally in ETH price.
Dash is another crypto that is even benefiting from the COVID-19 pandemic. People are advised to use contactless technology to send and receive payment to curb the spread of the health crisis.
Dash remains among the best cryptos suited for instant payments. It is easy, fast, and cheap to transact using the cryptocurrency.
Many other cryptocurrencies also look promising and may provide decent returns on investment in this year and beyond. Hence, all these use cases and positive outlooks into the future of various coins make crypto a good investment in 2021.
Why Invest In Crypto?
Cryptocurrency could be the next big thing and change the world as we know it. Being a global currency, it can be used for cross-border transactions without attracting huge fees like it is the case with fiat currencies. This capability can make cryptocurrency a good investment since it is expected to revolutionize the banking and financial sectors once the industry matures with adequate rules and regulations.
Today, crypto is not widely accepted around the world but things might be changing with El Salvador passing a law to recognize Bitcoin as legal tender. With more merchants beginning to accept cryptocurrency, it might have a major impact on society. By investing before the crypto market gains further, you could find yourself on the ground floor ready to reap huge profits.
Bitcoin is also known as ‘digital gold’ since there is a limited number of coins that can be mined. Proponents say that the scarcity increases bitcoin’s value, that may eventually drive the prices above $100K.
Cryptocurrency can help investors diversify their portfolio as the traditional markets drop. The nascent sector is expected to decouple from the traditional global economy eventually becoming a hedge in times of crisis. Thus, the ability to salvage an investor’s portfolio makes crypto a good investment in 2021.
But, always invest wisely since the crypto market is highly volatile and not all cryptocurrencies are created equally.