7 Reasons to Invest and Trade in Cryptocurrency in 2021
Unable to determine if cryptocurrencies are a wise investment? Cryptocurrencies are slowly taking hold of the financial markets, and blockchain technology is leading many multinational corporations to rethink how they operate.
As crypto takes the world by storm, it’s no surprise that more people are interested and in getting their hands on crypto.
While there are numerous reasons why people invest in cryptocurrencies, we’ve outlined the top 7 reasons why 2021 is the right year to invest and trade in these newfound and growing crypto assets.
- High Returns
- Investment Alternative
- With Crypto, Your Money is Yours Alone
- Highly Liquid Assets
- Easy to Invest In
- Favourable Predictions
1. High Returns
This one is rather obvious and one of the key reasons you should invest in crypto in 2021.
Although cryptocurrencies have been around for what’s a relatively short time period, they have proven themselves to generate far greater returns than other traditional assets such as stocks or bonds.
And while cryptocurrencies are known to be very volatile in nature, with the right preparation and knowledge, you can make great profits trading crypto.
This volatility is often lacking among other types of assets and is what makes cryptocurrencies overall very attractive to traders.
2. Investment Alternative
The world is starting to look at cryptocurrencies as a new and worthwhile investment. Recovering from the stock market crash in 2020, cryptocurrencies are seen by some as a better investment than traditional assets.
Many experts disagree on the benefits of traders moving to cryptocurrencies following the crash. But then again, they first emerged as a result of the aftermath of the 2008 financial crisis.
While some analysts believe that cryptocurrencies are more resilient, others believe they will suffer through the same fate as any other asset.
3. With Crypto, Your Money is Yours Alone
One of the best things about most cryptocurrencies is that they are decentralized. This means that there are no intermediaries, such as banks, that hold power over your rightfully earned money.
When you keep your money in a bank, you are at the mercy of other individuals and groups. In some cases, banks have the right to freeze your account and restrict access to your own funds at any point of their liking.
In addition to that, banks face the risk of going bankrupt or even robbed, placing your funds in an even more vulnerable position.
Fortunately, with cryptocurrencies, you have full independence from third-parties, and your money is entirely yours. You do not entrust it to financial institutions to store or transfer it.
Instead, you have your own ‘wallet’ where you keep your cryptocurrency. With crypto wallets, you also avoid fees that you would otherwise pay to a bank.
All of this has the potential to become the foundation of a completely open and decentralized economy in the long run, with all types of financial institutions and governments adopting the open structure.
It is still not too late to be at the forefront if you choose to invest now.
4. Highly Liquid Assets
Liquidity is one of the most crucial attributes of any asset you’re considering investing in. It refers to the ability with which an asset can be quickly converted into cash or another asset.
All tradable assets, including cryptocurrencies, need liquidity. A low level of liquidity can create market volatility. In cryptocurrencies, this can result in price spikes. On the other hand, high liquidity indicates a stable market with minimal price fluctuations.
In a liquid market, it is easier to buy or sell crypto because buy or sell orders are filled more quickly due to the high number of market players.
Given the intense nature of the crypto market, this essentially means that a trade can be entered or exited at any point in time, with a wide array of strategies.
5. Easy to Invest In
Historically, investing in any kind of asset, whether it be stocks, bonds, or something else altogether can often be difficult, time-consuming, and sometimes inconvenient.
Many investment opportunities have a very high entry threshold - some assets can’t be bought with a $100 investment; you’ll need to invest a much larger amount to get yourself started.
Cryptocurrencies are the opposite; they are quick and easy to enter and participate in. You can invest whenever you want with however much you want. You won’t have to deal with any institutions, sign any documents, or go to any banks.
It’s as easy as creating an account, obtaining a wallet and keeping track of all your assets with minimal effort. There has never been an easier asset to invest in.
6. Favourable Predictions
It can be very stressful to attempt to make a profit from day-to-day cryptocurrency trading if you have no prior experience.
Price fluctuations occur on a daily basis, and they are always much larger than those experienced with fiat currencies.
Looking at your investment as a long-term acquisition is a much safer option. With the right cryptocurrency, most predictions are positive and can show growth within two to five years.
For instance, if you had invested in Bitcoin four years back, you’d gladly thank yourself for having kept it all this time.
Read More: Crypto Predictions for 2021: Where to Invest
Still not convinced? Here’s another reason for investing in crypto in 2021. Investing in cryptocurrencies, even if you are not a crypto enthusiast, is a strategic way to diversify your portfolio.
What is portfolio diversification?
It’s a common strategy followed by many investors where you spread your investments over a range of different assets in different industries and markets to avoid risk. As the saying goes: ‘don’t put all your eggs in one basket.
Because cryptocurrency doesn’t correlate with other assets like bonds or stocks, investing in cryptocurrency is a smart way to find your place as a successful investor in today’s fast-paced and ever-changing financial world.
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Virtual currencies are highly volatile. Your capital is at risk.
- Although cryptocurrencies have been around for what’s a relatively short time period, they have proved far greater returns than other traditional assets such as stocks or bonds.
- Recovering from the stock market crash in 2020, cryptocurrencies may be the safest investment option in the event of a future economic crisis.
- With crypto wallets, you can avoid fees that you would otherwise pay to a bank.
- In a liquid market, it is easier to buy or sell crypto because buy or sell orders are fulfilled quicker due to the high number of market players.
- Cryptocurrencies are quick and easy to invest in. You can invest whenever you want with however much you want.
- Looking at your investment as a long-term acquisition is a much safer option - most predictions are positive and show growth within two to five years for much of the crypto market.
- Investing in cryptocurrencies, even for those who are not crypto enthusiasts, is a smart way to diversify your portfolio.