Are you curious why cryptocurrencies are in the hot market? Here is an assessment of how digital coins have captured the interest of investors all over the globe. Learn more about this gem by going over its strengths, weaknesses, opportunities and threats.
Table of Contents
Strengths
It has built an independent market that is free from government intervention. The value of digital currencies is a by-product of a free market. For this reason alone, investors will no longer have to worry about ending up with an economic bubble caused by state interference. The rise and fall of prices are subject to market behaviour alone.
As much as cryptocurrencies are beyond the control of any government, they are also fluid in the sense that they are not limited by interstate or even inter-country boundaries. The good thing about being embedded in an internet economy is the idea of defying territorial boundaries. No wonder, digital coins are considered global currencies.
Not as complicated as investing in traditional financial instruments, all it takes to invest in the crypto market is a decent trading platform. You will only need to spend some time getting acquainted with the simple process of buying and selling coins. Discover some useful materials made available by a reputable crypto trading platform.
Weaknesses
There is no absolute guarantee when it comes to crypto trading. Since it is an offshoot of a free market, investors will have to face risks. It is for this reason that caution is highly recommended whenever one is in the business of keeping crypto accounts.
The value of digital currencies will fluctuate depending on market behaviour. No definite value is assigned to this kind of investment compared to government-backed securities. It is not the best option for those looking for guaranteed financial security.
While it is gaining a decent following, the crypto market is still subject to scepticism. It can be considered to be on its inception despite the emergence of many different digital currencies. Traditional securities are still being favoured, especially those with fixed earnings. The introduction of digital banknotes may also capture the interest of those interested in crypto trading but be drawn back by lack of security.
Forbes has listed the risks ascribed to cryptocurrencies.
Opportunities
The best thing about cryptocurrencies is the spacious room for opportunities. Perhaps you might have heard of the adage, “high risks, high rewards.” It is a concept in stock trading that encourages investment in highly volatile stocks in hopes of earning high profits.
Imagine the rise of social media and digital content platforms like Facebook, Twitter and YouTube which revolutionised the internet economy. The value of these innovative companies skyrocketed through the years. It meant huge income for investors who took the risk.
With a boost from the internet economy, let alone the global platform, the growth of the crypto market is also unstoppable. There is also the emergence of crypto exchanges such as The Bitcoin Rush. Crypto operations are gaining traction in more and more countries outside the United States. In the same way, it is capturing the interest of people belonging to different regions all around the globe.
Threats
From the last quarter of 2020 up to the first quarter of 2021, the crypto community was shaken by the suit against Ripple. There was an alleged failure to register the cryptocurrency as financial security, which was a violation of federal laws. Ripple is now working on a settlement to resolve the dispute once and for all.
Whether or not Ripple is financial security, the crypto market is in a stalemate pending the resolution of the court. The peculiar nature of cryptocurrencies is expected to save it from judicial scrutiny as an investment with a class of its own. It would not be mandated to be registered under the federal securities law.
The much-anticipated ruling in the Ripple case will be a decision point for most cryptocurrencies. A win would certainly encourage operations in America. On the other hand, a loss would divert crypto operations to regions with greener pastures. It would favour those countries with fewer state regulations on digital currency trading.
Read this article for more information on the Ripple Suit.
Conclusion
Upon assessment of strengths, weaknesses, opportunities and threats pertaining to cryptocurrencies, it is noteworthy that the crypto market is nonetheless a promising venture for interested investors.
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