Is it a risk to invest in cryptocurrencies?

2 min. reading
Bitcoin, Blockchain, Crypto, Ethereum / 13 June, 2022

Andrea Daly Aurenty Journalist

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Investing in cryptocurrencies or digital currencies has become a very popular type of investment among people under 40 years of age, which has extended its analysis regarding the risk it may have compared to other types of investments.

How popular are cryptocurrencies?

The aforementioned digital currencies have spread in all industries. From the video game industry, luxury stores, small businesses, among others. Their worldwide popularity is also highlighted, being the countries with the greatest use of them:

India

US

Nigeria

Vietnam

United Kingdom

The pandemic also had an impact on the cryptocurrency market. In fact, it is estimated that after 2020 this market grew by 900%, being one of the main resources that millennials leaned on in times of financial crisis.

This growing popularity has also resulted in an increase in situations that can lead to a negative view of cryptocurrencies. However, these risks can be seen in various types of investments.

Cryptocurrencies: Ranking of cryptocurrency users and cashiers in the world

Cryptocurrencies: Ranking of cryptocurrency users and cashiers in the world

Investment in cryptocurrencies is popular mainly in India, where last year, 18% of respondents claimed to own bitcoins.

Is it risky to invest in cryptocurrencies?

In the financial market there are numerous types of investments whose volatility varies, thus determining the risk they may have for the investor. Digital currencies have high volatility, as well as many other investments, which translates into a greater need for analysis of the cryptocurrency in which you want to invest.

Analyzing the behavior of those investments of interest is one of the most important steps in making decisions regarding your finances, and the help of a financial advisor can make the difference between a good or bad investment.

Investing in cryptocurrencies is then one of a large group of volatile investments, which, although they have a high risk, can also have a high return.

What is the future of cryptocurrencies?

Although the momentum of the use and trade of cryptocurrencies during the pandemic was unprecedented, estimates ensure that the annual growth of this industry will be 13% per year until 2030.

This may increase thanks to the number of countries that are making cryptocurrencies legal. Currently, more than 100 countries have made this decision, expanding the financial market considerably.

Even when this market does not have regulations by the authorities that could increase security in transactions and reduce volatility, many of those involved do not consider that they are necessary. To be exact, according to GWI, 15% of all investors and 22% of potential investors would prefer that no regulations be made, since this market is regulated by the community itself and the Blockchain.

It can therefore be said that the popular cryptocurrencies are one more investment to consider if you seek to diversify your portfolio and the decision of which one to invest in is based on an exhaustive analysis that must be carried out in any highly volatile investment.

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