Those who have invested in cryptocurrency in the past year or so have likely enjoyed some extreme highs and tumultuous lows along the way. The digital coins, which can be used the same way as money by two parties who have adopted the technology, have also attracted the attention of investors, who looked at it as an asset class with outstanding potential. Yet there has also been a backlash against by those who doubt its staying power.
As a result, volatility has become part and parcel of the cryptocurrency experience. If you are going to trade these coins, you should consider getting the assistance of a program like Crypto Code to help you through the potential minefields of these investments. On the other hand, if you are going to brave this wild new world of investing on your own, you should be aware that, for the following reasons, cryptocurrency and volatility will likely be walking hand in hand very soon.
1. Typical Correction
What goes up must come down, or so they say. The value of some of the leading cryptocurrencies rose so drastically in the past year that it was only natural that there would be some sort of correction. This is true for any asset that enjoys great success. It’s simply unrealistic to expect infinite upward trajectory from cryptocurrency.
2. Jumpy Governments
Many governments around the world, perhaps wary of the upheaval that would take place if cryptocurrency dislodged banks in the hearts of customers, have taken a hardline approach to the technology and made it difficult for it to be utilized. Investors, hearing those rumblings from across the globe, have been understandably wary.
3. Diluted Field
With every entrepreneur seemingly trying to get rich by mining their own crypto coins, often without much of an original idea to back them, the field of coins has become diluted. Many investors, skeptical of these newcomers, are staying away completely.
4. The News Cycle
Perhaps no asset class has undergone as much scrutiny as cryptocurrency in the past few years. That leads to it constantly being mentioned in the news, and not just in the financial section. Every piece of information, good or bad, tends to have an effect on the cryptocurrency market as a whole.
5. Wild Speculation
An investment bubble is created when people invest in something just because the mob is doing it, without really inspecting what it’s all about. That seems to be a part of the reason why cryptocurrency has had such a bumpy road lately. Now the question remains whether or not it will be able to right the ship and start to make steady upward progress for its investors as a whole.
Conclusion
The ups and downs of cryptocurrency by no means should dissuade you from choosing it as an investment. But it does mean that you have to be prepared for a bit of a rocky road until things smooth out for this extremely volatile class of assets.
