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As stocks plunge into a bear market, cryptocurrencies and even entire exchanges crash along with them. The stock market, however, has history on its side.
Bull markets fall into bear markets as the business cycle turns and then the market grows strong again. Long-term stock investors, for the most part, can keep their money on the line, weather the storm, and wait for the inevitable rebound.
There is no such precedent for the storm that is affecting the crypto markets, but that does not mean that digital currencies cannot continue to be a good investment. Many investors avoided crypto long before the current turmoil, and a recent GOBankingRates survey of 1,037 American adults sheds light on some of the reasons why.
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While their concerns are certainly valid, the same cannot always be said for their logic, which is why GOBankingRates asked the experts to address their concerns.
This is what they said.
According to the study, 60% of people who do not invest in cryptocurrencies avoid digital currencies simply because they do not understand them.
They are wise to avoid investments they don’t understand, but like the bond market, the stock market, the real estate market, and any other highly complex field that involves buying and selling assets, the knowledge needed to make sense of it. everything is there for the taking.
“Cryptocurrencies in 2013 were too complex to understand due to the limited resources we had,” said Jibran Qazi, an avid NFT trader, a veteran of the blockchain industry, and an MCPD online seller. “Fast forward to 2022 and we have comprehensive guides, books like “Blockchain Revolution” and tons of YouTube videos to understand the deep basics of cryptocurrencies and the blockchain industry. If people previously assume that cryptocurrencies are complex, then they will remain complex.”
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More than one in four of the respondents in the study, 26%, do not invest in cryptocurrencies because they do not trust their security. If you want to learn about security vulnerabilities, you should look at banks that leak data and invite fraud where they keep your cash.
“Bitcoin is the most secure payment platform ever invented,” said Jenell McLaughlin, chief media officer at Sarson Funds, a cryptocurrency investment education and marketing firm. “There has never been a hack of the Bitcoin blockchain. Smart contracts that are built on top of blockchains can have vulnerabilities and logical errors similar to any other software application. Over time, the processes and procedures for building on blockchains will be further examined and there will be a reduced number of bugs and issues.”
Exactly one in five of the survey respondents do not invest in cryptocurrencies because they do not have the stomach for the wild price swings that defined cryptocurrency trading long before the most recent market turmoil.
Rollercoaster volatility is hardly a figment of your imagination, but those who lose the most from the ups and downs of the market tend to be those chasing big, quick wins. You can protect yourself from volatility with the same principles that apply to stock investing: diversify your holdings, avoid trying to time the market, and pick winners you believe in and stick with them for the long haul.
“Volatility is primarily an issue for short-term day traders rather than long-term cryptocurrency holders,” said Harry Clynch, a writer for Disruption Banking, a cryptocurrency-focused online financial publication. “Those who invest in cryptocurrencies should not do so for short-term gains, but rather as part of a balanced portfolio that aims to deliver long-term results.”
As with the Internet in the early 1990s, there are still credible analysts today who simply don’t believe cryptocurrencies have a future, with one in five of the study’s respondents citing that as the reason they don’t invest. in digital currencies. .
As turned out to be the case with those naysayers in the early days of the World Wide Web, that’s a short-sighted position to take in 2022.
“Crypto has been dismissed as hype for many years, and it is still with us and growing,” Clynch said. “New technologies like the metaverse and NFTs rely on cryptocurrencies and show that they will have use cases in the future. Crypto markets are becoming of a size and sophistication that makes it impossible to dismiss them as a mere fad.”
Anup Kayastha, crypto expert and owner of CryptoProfitCalculator, agrees.
“The market is expected to triple by 2030, which would reach a valuation of $5 billion,” Kayastha said. “Brands and people would have to accept the importance of the growing cryptocurrency market.”
Finally, 17.5% of the people who participated in the study distrust the lack of regulation of the industry. Many of the experts who spoke to GOBankingRates feel they are right, but the silver lining of the current crisis is that the currently unfolding calamity will almost certainly lead to tighter supervision.
“Strong regulation is certainly required to protect consumers,” Clynch said. “We have previously covered how some unregulated crypto exchanges have not shown enough stringency when it comes to compliance. This is why it is so important for regulators globally to protect consumers from bad faith actors, in a targeted and proportionate way. Cryptocurrencies can have a bright future as a mature and regulated industry.”
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Methodology: GOBankingRates surveyed 1,037 Americans aged 18 and over from across the country between April 8-9, 2022, asking them eight different questions: (1) Do you invest in cryptocurrencies?; (2) If you don’t invest in cryptocurrencies, why not? (Select all that apply); (3) How long have you invested in cryptocurrencies?; (4) What is your main objective for your cryptocurrency investments?; (5) What percentage of your investments are in crypto?; (6) What cryptocurrencies are you invested in? (Select all that apply); (7) How much have you profited from cryptocurrencies (all times)?; and (8) Which cryptocurrency exchange(s) do you use? (Select all that apply). GOBankingRates used the PureSpectrum survey platform to conduct the survey.