Cryptocurrency: Due to mounting geopolitical concerns between Russia and Ukraine, red-hot inflation figures, rising energy prices, and a jump in bond yields, the cryptocurrency market has come under tremendous pressure, with a dramatic drop in crypto values recorded in the last week.
The worldwide market capitalization has dropped more than 5% in the last 24 hours, to $1.85 trillion. A week ago, it was above $2.05 trillion. Nonetheless, the digital token market’s volumes have remained high.
According to the OKX research team, crypto tokens plummeted ahead of Tuesday’s US Consumer Price Index announcement.
Altcoins including Solana, Terra, Avalanche, Polkadot, and XRP, which are among the 15 largest cryptocurrencies, have dropped up to 9% in the last 24 hours, representing a weekly drop of up to 30%.
Dogecoin and Shiba Inu, two meme tokens, have also been under attack. Despite Elon Musk’s efforts, Dogecoin has dropped 10% in the last week, while Shiba Inu has dropped 16% in the same time frame.
After every market recovery, according to Pratik Gauri, Founder, and CEO of 5ire, cryptos go through a winter.
“The war between Russia and Ukraine, as well as the West’s response to it, are important contributors to the decline. These variables will continue to have an impact on crypto investments, which are, of course, a highly volatile asset class “Gauri remarked.
Bitcoin reaches a new high of $40,000 after Tesla CEO Elon Musk thinks the cryptocurrency might be used again.
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Bitcoin soared beyond $40,000 on Monday, following yet another weekend of price swings triggered by comments from Tesla CEO Elon Musk, who defended his market power by saying Tesla sold bitcoin but may resume transactions using it.
Since Tesla revealed a $1.5 billion bitcoin acquisition in February and indicated it would accept bitcoin as payment, bitcoin has gyrated to Musk’s views for months.
Later, he stated that the electric vehicle manufacturer would not accept bitcoin.
“Musk’s Statements Pushed Bitcoin Higher,” Said Simon Peters, an Etoro Market Analyst
Bitcoin received an additional boost on Monday after billionaire hedge fund manager Paul Tudor Jones told CNBC that bitcoin is a fantastic way to secure his wealth over time and that it is a part of his portfolio, much like gold.
Also, read Elon Musk, President Zelensky discusses Ukraine
MicroStrategy, a software business and a key bitcoin advocate, raised half a billion dollars to acquire bitcoin, according to Bobby Ong, co-founder of cryptocurrency.
Bitcoin has gained roughly 40% this year, but it has fallen from a record high of over $60,000 due to a governmental crackdown in China and Musk’s waning excitement for it. Tesla’s stock dropped by nearly 30% after the company bought bitcoin.
Musk’s post was in response to an article based on comments by Magda Wierzycka, the CEO of cybersecurity firm Syngia, who accused him of “price manipulation” and selling a “large part” of his exposure in a radio interview last week.
Is Investing in Cryptocurrency a Good Idea?
In 2022, you could become extremely wealthy by investing in cryptocurrencies, but you could also lose all of your money. Investing in crypto assets is risky, but it can also be incredibly lucrative.
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If you want to obtain direct exposure to the demand for digital currency, cryptocurrency is a good investment. Buying the equities of firms with bitcoin exposure is a safer but potentially less rewarding option.
Is Cryptocurrency a Safe Investment?
Cryptocurrency is a risky investment due to several variables. Other evidence, on the other hand, is pointing to the fact that bitcoin is here to stay.
Risks Associated With Cryptocurrencies
Cryptocurrency exchanges, more than stock markets, are prone to hacking and other forms of criminal behavior.
Investors who have had their digital currencies stolen have suffered significant losses as a result of security breaches, prompting many exchanges and third-party insurers to begin offering hacker protection.
Also read: Russian Bitcoin and Other Cryptocurrencies Could Be Part of Future Sanctions
Cryptocurrencies are much more difficult to store safely than equities or bonds.
Cryptocurrency exchanges like Coinbase (NASDAQ: COIN) make buying and selling crypto assets like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH) relatively simple, but many people prefer not to keep their digital assets on exchanges due to the risks of allowing any company to control access to their assets.
You don’t have complete control over your assets if you store cryptocurrencies on a controlled exchange. A government request could cause an exchange to freeze your assets, or the exchange could go bankrupt, leaving you with no way to reclaim your funds.
Some bitcoin users prefer offline “cold storage” options like hardware wallets, however cold storage has its own set of issues. The most dangerous is losing your private key; without it, you won’t be able to access your cryptocurrency.
Additionally, there is no guarantee that a cryptocurrency project you invest in will thrive. Thousands of blockchain projects compete for attention, and many of them are nothing more than scams.
Only a small portion of cryptocurrency projects will succeed in the long run.
Regulators may potentially take action against the entire crypto business, particularly if countries regard cryptocurrency as a threat rather than a cutting-edge technology.
Cryptocurrency’s cutting-edge technology features also enhance the hazards for investors. Much of the technology is still under development and hasn’t been thoroughly tested in real-world circumstances.
Adoption of Cryptocurrencies
Cryptocurrencies and the blockchain business are growing stronger despite the risks. Investors are increasingly able to obtain institutional-grade custody services as much-needed financial infrastructure is being constructed.
Professional and individual investors are gradually gaining access to the tools they need to manage and protect their cryptocurrency holdings.
Many firms are gaining direct exposure to the cryptocurrency sector, and crypto futures markets are being developed.
Block (NYSE: SQ) and PayPal (NASDAQ: PYPL), two financial behemoths, are making it easier to buy and trade bitcoin on their famous platforms.
Block and other firms have invested hundreds of millions of dollars in Bitcoin and other digital assets. In early 2021, Tesla (NASDAQ: TSLA) purchased $1.5 billion worth of Bitcoin. By February 2022, the electric car manufacturer had reported holding about $2 billion in bitcoin.
MicroStrategy is a company that specializes in micromanagement (NASDAQ: MSTR)
Since 2020, a business intelligence software company has been gathering Bitcoin. By the end of 2021, it had $5.7 billion in cryptocurrency and claimed it planned to buy more with excess revenue earned from operations.
Although various factors continue to influence the riskiness of cryptocurrencies, the increasing rate of adoption indicates that the market is maturing. Individual investors and businesses are looking to get direct exposure to cryptocurrency because they believe it is safe enough to invest large sums of money in.
Is Cryptocurrency a Good Long-term Bet?
Many cryptocurrencies, such as Bitcoin and Ethereum, are launched with lofty goals that can be accomplished over long periods.
While the success of any cryptocurrency project cannot be guaranteed, early investors in a cryptocurrency project that achieves its objectives can be rewarded handsomely in the long run.
To be considered a long-term success, any cryptocurrency project must first achieve widespread adoption.
As a Long-term Investment, Bitcoin
Because Bitcoin is the most well-known cryptocurrency, it benefits from the network effect, which means that more people want to own it because it is the most popular. Many investors regard Bitcoin as “digital gold,” but it could also be used as a digital form of money.
Because the supply of bitcoin is fixed, unlike the supply of fiat currencies like the US dollar or the Japanese yen, investors believe the cryptocurrency will appreciate over time.
Bitcoin’s supply is limited to less than 21 million coins, whereas conventional currencies can be created at the discretion of central bankers. Many investors believe that when fiat currencies decrease, Bitcoin will appreciate.
Those who believe Bitcoin has the potential to become the first truly global currency believe it will be widely used as digital payment.
As a Long-term Investment, Ethereum Is a Good Choice
Ether is the Ethereum platform’s native coin, and it may be purchased by investors who want to diversify their portfolios using Ethereum.
While Bitcoin is considered digital gold, Ethereum is developing a worldwide computing platform that will enable a wide range of other cryptocurrencies as well as a vast ecosystem of decentralized apps (“dApps”).
Because of the enormous number of cryptocurrencies established on the Ethereum platform, as well as the open-source nature of dApps, Ethereum has the potential to benefit from the network effect and generate long-term value.
Smart contracts, which execute automatically based on terms entered directly into the contract code, are possible on the Ethereum platform.
In return for executing smart contracts, the Ethereum network takes Ether from users.
Smart contracts can disrupt large businesses like real estate and finance, as well as create new markets.
The Ether token gains utility and value as the Ethereum platform gets more widely used around the world. Investors that believe in the Ethereum platform’s long-term potential can profit directly by purchasing Ether.
That isn’t to suggest Ethereum isn’t up against it. Solana (CRYPTO: SOL), Polygon (CRYPTO: MATIC), and Avalanche (CRYPTO: AVAX) are all “Ethereum Killers” that are built to handle smart contracts and use a blockchain infrastructure capable of processing more transactions per second.
The speed also has the benefit of being less expensive for users. However, Ethereum is the most widely used smart contract platform.
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