In 2021, investing in cryptocurrencies has the potential to make you extremely wealthy. However, you might lose all of your funds. How can both be true at the same time? Investing in crypto assets is dangerous, but it can also be incredibly lucrative.
Before we start looking at companies in which we can invest, it is worthwhile to understand what is happening in the crypto industry and what to expect in the future. In 2021, the crypto sphere went through several important stages of its formation:
Many large companies have entered the cryptocurrency market. For example, PayPal’s instant payment system allowed users to use digital assets to make transactions.
Well-known organizations such as Tesla have also invested part of their capital in digital currencies.
The market capitalization of tokens is growing fast enough. This year, Bitcoin managed to overtake a number of large companies and organizations in terms of capitalization, the list of which included: Tesla, Facebook, Alibaba.
These are not all events that can encourage investors to invest in crypto companies. At the beginning of 2021, a historic event took place – Coinbase became the first cryptocurrency exchange to be publicly listed.
Other players in the industry are likely to follow suit soon. As a result, it turns out that this will have a positive impact on the dynamics of their shares.
What are the differences between investments in shares of crypto companies and cryptocurrencies?
Changes in the value of shares will require a number of factors, in contrast to digital assets. This shows that securities are less volatile than digital coins.
The shares of crypto companies do not depend directly on the exchange rate of cryptocurrencies. Therefore, even when withdrawing coins, they can grow in value. However, there is a positive relationship between the two types of assets, ie where the crypto market goes, so do the shares of these companies. Below we present the main advantages and disadvantages of investing in crypto tokens over the purchase of securities.
Pros of investing in stocks:
*The level of variability is lower than that of cryptocurrencies.
*Security. Before going for an IPO, a company is usually checked many times. Therefore, the possibility of a fraudulent organization is ruled out.
*Investments will be safer during the negative background of news in the digital currency market.
Cons of investing in stocks:
*In some cases, the investor faces a high entry threshold. There are some organizations that sell securities only to highly qualified traders.
*News in the crypto field can also negatively affect the growth of the company’s shares.
*The profit we will get from investing in securities may be less than we would get from investing in crypto.
Advantages of investing in cryptocurrencies:
*A good strategy increases the possibility of quick profits. In addition, the high volatility of digital assets contributes to rapid profits.
*Anyone can invest in them.
Disadvantages of investing in cryptocurrencies:
*There is a risk of encountering a fraudulent project.
*Due to the high variability, you can quickly lose your investment.
Cryptocurrency is a high-risk investment, and you should only consider it if you’re financially ready to lose any money you put into it.
Of course, investing in shares of crypto companies can bring you profit. This type of investment has significant differences from direct investment in cryptocurrencies, but also has factors that are directly related to digital assets. Therefore, it is up to us to decide where it is better to invest.