Posted by Xoken.org – Investing is a good decision to maintain finances. Investment instruments are very diverse, ranging from low-risk to high-risk assets. In the investment formula, the greater the risk, the greater the potential profit. For those who want to make big profits, they can place their funds in crypto instruments.
However, crypto investment is an investment instrument with the highest risk. Because crypto is a digital currency whose value is not regulated by the government or central bank, but is regulated using blockchain technology. Basically, fiat currencies, such as the rupiah and the dollar, no longer have underlying assets in this modern era. Previously, fiat had an underlying asset in the form of gold, but the United States eliminated it in 1971.
On the other hand, crypto, as a digital currency, also does not have an underlying asset. However, pro crypto investors view that the underlying basis of crypto is blockchain technology. Investors can gain profits from investing in crypto through price increases. Quoting BankRate, crypto price movements are based on speculation from sentiment.
Of course, this choice will also depend on the investor’s risk profile. Following are the pros and cons of investing in crypto from various sources and analysis by the CNBC Indonesia research team
Pros of investing in crypto assets
Fiat currency hedging is an advantage of crypto as a currency that rebels against the fiat system, considering that it is naturally not regulated by governments and central banks. Usually, a weakening fiat currency will increase the value of crypto and vice versa.
The potential for high profits is the reason to invest in crypto. Since November 2015, Bitcoin has returned 85 times or 8,500%! Investing IDR 1 million in Bitcoin at that time will grow to IDR 85 million.
The increase in the number of cryptocurrencies and their interest due to the Covid-19 pandemic has led almost central banks throughout the world to implement policies to increase the number of fiat currencies. This makes market players increasingly doubtful of the government and central bank regarding the potential for inflation and interest rate increases in the future.
This makes market players invest in assets versus fiat currency, so that interest in crypto increases and many new cryptocurrencies emerge.
Cons of investing in crypto assets
Crypto’s high volatility is the risk behind its high returns. The high increase in crypto prices was followed by a high decrease. Therefore, crypto is often referred to as an asset with high risk and high returns or “high risk, high return”.
The risk of cybercrime is a risk of digital currency. The increase in digital quality is accompanied by digital criminals too. Lost
Crypto does not have intrinsic value like shares which have an underlying asset in the form of a company.
Stocks can be valued using company performance, whereas crypto has no assets that can represent the digital currency.
Regulatory risk is a problem for crypto investors. Many countries prohibit crypto trading, because there is still no clarity about these new assets.
Recently, regulatory issues have become an issue with lawsuits against Binance, Coinbase, and so on.
Crypto publisher fraud often occurs amidst the increase in irresponsible cryptocurrencies. This action is usually called a rug pull or money being taken away by a coin developer, as happened at FTX.
A number of sentiments are expected to increase the valuation of crypto coins in 2024. For investors, it should be noted that there are several coins that are predicted to bring in multiple profits.
According to Nasdaq.com, not only are interest rates expected to fall, but upcoming ETFs are also expected to be approved for several leading cryptocurrencies.
As the investment landscape improves, investors’ risk appetite will return. This means that one can increase his overall profits (and also his risk-adjusted rate of return) by investing in these assets.
Therefore, here are three crypto predictions to help investors understand the market:
Bitcoin (BTC)
The highly anticipated Bitcoin (BTC-USD) halving event later this year is definitely happening. Since there will be no more Bitcoin, its maximalists will tell you that there is no need to use other networks either.
Among the most passionate and knowledgeable, Bitcoin is considered the only true cryptocurrency. The rest were derided as failed projects or frauds. This perspective has several benefits. Blockchain technology essentially does not contain the often advertised benefits of decentralization, security, or immutability.
An astute investor has seen countless hacks against protocols that claim to be secure, but then cause widespread financial destruction to their user base. User error, backdoors, coding errors, and social engineering attempts can all compromise the security of other networks.
But that is not the case with Bitcoin. It was researched by hundreds of independent developers, security experts, and cryptographers. Additionally, decisions can only be taken through unified consensus by those driving the network.
In essence, Bitcoin is a blue-chip option for investors who want to own a very stable and strong cryptocurrency. Furthermore, current crypto predictions suggest that the value could reach $1 million per coin if the stars align.
Ethereum (ETH)
Ethereum (ETH-USD) is another blue-chip cryptocurrency option. Crypto analyst predictions for ETH are also optimistic, with some suggesting it could reach $5,000.
In particular, investors should be wary of forecasters and also underestimate crypto predictions. In contrast to stock markets, which are often argued to act rationally and efficiently, crypto markets behave much differently.
There is much more information asymmetry with cryptos compared to stocks. (Bitcoin does not need to publish financial disclosures or reports). So, people are more likely to act based on behavioral biases of fear, FOMO, and speculation than to make reasonable assumptions.
Despite the speculation attached to crypto predictions with ETH, the value of the asset could soar, following “positive developments” in the formation of an Ethereum ETF.
As with Bitcoin ETFs, those operating Ethereum ETFs can indirectly drive up the price of the asset. This may be because they may be required to hold a large amount of Ethereum, or even a 1:1 ratio of assets under management.
Additionally, we can look at exotic ETFs if these crypto ETFs are included, such as leveraged, inverse, or volatility ETFs.
Binance Coin (BNB)
Despite the controversy surrounding Binance and Binance Coin (BNB-USD), this could still be a solid altcoin to hold.
Binance has shown surprising resilience in the face of criminal lawsuits from its founders, a crackdown on crypto in China, and other challenges. Additionally, it maintains its position as the world’s largest cryptocurrency exchange by trading volume by a huge margin.
BNB has strong utility in the Binance ecosystem. It is used to offer discounts on trading fees, and also allows investors to participate in token sales on Binance Launchpad. And, the company can be staked or used in various yield farming and liquidity mining programs within the Binance ecosystem, so that holders can earn rewards or interest.
Due to Binance’s continued dominance and strong BNB use cases, the coin may continue to rise in the future. Therefore, it may be the main beneficiary of this year’s crypto bull market.