Investors have recently got into the market of cryptocurrency as it has shown the potential it has for high gains. Many continue to wonder, can cryptocurrency work as a part of a broader portfolio comprised of more than just crypto?
One of the main issues with investing in cryptocurrency is the extreme volatility. With a market that is often controlled by speculation, it can be hard to determine accurate pricing or even information when investing. Options have remained high for the currency to become a place to put away wealth when inflation is occurring, or other investments are dropping.
Some investors have viewed the currency as simply a commodity rather than a solid investment. This changes however, when returns have been in the hundreds of percents. This is unlike returns from the commodity market. While competing against various fiat currencies or in other words, currencies backed by some central body, cryptocurrency has held up quite well.
Developers have been coming up with new uses for the currency and the technology as a whole, which has increased interest in the market space altogether. Funds have begun to spring up offering bulk investments in the market as a whole while other venture capital style firms have helped to use cryptocurrency to start companies.
There does exist however, a list of risks associated with investing in cryptocurrency that is unlike most other investments. Trading strategies have become solely based on the knowledge of the market, and those who do not understand it, cannot see a return. With other challenges such as the speculation aspect, it becomes difficult for the average person to invest in cryptocurrency. Those who can understand the market and bypass the high barriers of entry, are often the ones who make the most in the market space.