Explore Career Opportunities In The Crypto Market
One way to “invest” in the cryptocurrency market is by working for a crypto company. And now, there are more choices than ever. Crypto-related job opportunities surged 395% in the US between 2020 and 2021, according to. That’s about four times more than job listings in the broader tech industry.
After spending most of her career working for conventional financial institutions like TIAA and BlackRock, corporate communications executive Lauren Post was tapped to join Bakkt, an Atlanta-based digital asset platform. Bakkt, which went public last fall, works with noncrypto companies that want to offer their clients cryptocurrency experiences. This includes working with , as well as teaming up with banks to help them integrate crypto trading with their platforms.
“I was both intrigued and slightly apprehensive because I didn’t know much about crypto,” said Post in an email. “But, after having spent my career at traditional financial services companies, I realized that learning about crypto couldn’t be much different from learning about target date funds, fixed income, credit default swaps or any other corner of finance. I also realized that the skills I have unpacking complex topics for general audiences can be applied to any industry and are timely for the crypto space right now.”
The Beauty Of Crypto Stocks
The best part about cryptocurrency stocks is that most of them are not pure plays on the industry — giving investors the reward of ample diversification. Cryptocurrencies are quite volatile and can cause wild swings in the revenue and earnings of companies with sector exposure. However, the crypto realm is rapidly gaining mainstream adoption. In August 2021, United Wholesale Mortgage , the second-largest mortgage lender in the country, announced it would accept Bitcoin as mortgage payments from its customers. Expect further momentum in crypto stocks as more and more companies join in the blockchain revolution.
How To Invest In Cryptocurrency Step By Step Guide
As you might imagine, you can’t go to a local bank or even a brokerage firm and buy cryptocurrency. It’s still seen as something exotic in the world of financial institutions. Since it’s not well understood and is virtually unregulated, most financial institutions don’t want to deal with it. For that reason, it tends to function within its own network.
Read our tips if you want to start investing in cryptocurrencies.
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What Is A Cryptocurrency Broker
Cryptocurrency brokers take the complexity out of purchasing crypto, offering easy-to-use interfaces that interact with exchanges for you. Some charge higher fees than exchanges. Others claim to be free while making money by selling information about what you and other traders are buying and selling to large brokerages or funds or not executing your trade at the best possible market price. Robinhood and SoFi are two of the most well-known crypto brokers.
While theyre undeniably convenient, you have to be careful with brokers because you may face restrictions on moving your cryptocurrency holdings off the platform. At Robinhood and SoFi, for instance, you cannot transfer your crypto holdings out of your account. This may not seem like a huge deal, but advanced crypto investors prefer to hold their coins in crypto wallets for extra security. Some even choose hardware crypto wallets that are not connected to the internet for even more security.
Best Cryptocurrencies By Market Capitalization
More than 17,500 different cryptocurrencies are traded publicly, according to CoinMarketCap.com, a market research website. And cryptocurrencies continue to proliferate. The total value of all cryptocurrencies on Feb. 18, 2022, was about $1.8 trillion, having fallen substantially from an all-time high above $2.9 trillion late in 2021.
If that weren’t enough to navigate, there are millions of NFTs or nonfungible tokens which are based on similar technology and offer ownership of content such as pictures and videos.
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What You Must Know Before Investing In Cryptocurrency
When it comes to cryptocurrencies, one of the biggest challenges for investors is not getting caught up in the hype. Digital currencies have quickly risen to a place of prominence in the portfolios of many retail and institutional investors. At the same time, analysts have continued to caution investors about their volatile nature and unpredictability.
If you’ve decided to invest in the cryptocurrency market, as with any other investment, it’s important to do your research before you hand over any money. Below, we’ll explore the things you should know before you invest.
Cryptocurrency: How To Actually Invest In Crypto
What to consider before investing
Acryptocurrency or crypto is a digital currency that circulates without a central authority like a bank or a financial institution.
Unstable economic environments fomented the creation of cryptos.
Cryptos were made to protect you from economic crises or unfair governments that can take away your resources.
“Cryptocurrency is one of those categories of investing that doesn’t have those traditional investor protections,” said Gerri Walsh, senior vice president of Investor Education at the Financial Industry Regulatory Authority.
“They’re outside the realm of securities trading. It’s an area that’s in flux, as far as regulations go.”
Sensationalism generates expectations. Knowing that a crypto investor became rich generates interest among people.
Nevertheless, many people entered the cryptocurrency market with blind knowledge of the matter.
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Is Cryptocurrency A Good Investment
The cryptocurrency markets are far more volatile than the stock markets. With less liquidity, and more speculation than traditional financial markets, the value of any given cryptocurrency can rise and fall by 30% or more in a day. Not only that, crypto markets are open for trades 24/7, 365 days a year. There are no evenings or weekends off like the NASDAQ or LSE
If youve been hearing about cryptocurrencies a lot these days, you may feel like its a good opportunity to make a quick profit. But if youre just jumping on the bandwagon and take no steps to educate yourself about how the technology and the market work, you risk losing money.
Lets take a look at Bitcoin, for example the first and by far most dominant cryptoasset.
Early investors in Bitcoin have made millions of dollars in profits. In the span of just one year, Bitcoins price went from $7,000 USD in April 2020 to over $60,000 USD in April 2021! Now imagine what kinds of profits went into the pockets of people who bought Bitcoin back in 2013, when it was a mere $100 USD.
Though that sounds very exciting, it certainly is not the whole picture. Take a look at the entire graph, showing Bitcoins fluctuations in price between October 2013 and the end of May 2021. Its not a straight upward climb.
Thats why you should only ever risk as much money as you can afford. Like Wence Casares, CEO of Xapo, sums it up in an AMA on bitcoin.com:
Choose Where You Want To Invest
Once you’re ready to buy your first cryptocurrency, you’ll need to decide whether you want to use a centralized or decentralized exchange.
For-profit companies create centralized exchanges that can be simple to use but come with fees that can eat into the value of your coins and may be vulnerable to hackers. These companies, like Crypto.com, Coinbase and Gemini, make it easy to create an account and invest in any cryptocurrency that the platform supports in your area.
Alternatively, you can create a cryptocurrency wallet you control, add funds and buy crypto with it. You can then connect the wallet to a decentralized exchangepopular options include Curve, Sushiswap and Uniswapto buy others.
In either case, you may be able to add funds with a bank transfer, debit card or credit card. The fees for depositing money and each trade can depend on the platform, funding source and how much you’re trading.
In general, a centralized exchange is the safest and easiest way to start. The company will hold the cryptocurrency for you and can help you reset your password if you forget it. They may also have insurance or guarantees that can help keep your money safe from hacks. But using a centralized exchange means you don’t have total control over your cryptocurrency, which can be a downside.
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Join An Online Community Of Cryptocurrency Enthusiasts
Because the digital currency space is such a trendy area, things tend to develop very quickly. Part of the reason for this is that there is a robust and very active community of digital currency investors and enthusiasts in communication with one another around the clock.
Get plugged into this community to learn about the buzz going on in the cryptocurrency world. Reddit has become a central hub for digital currency enthusiasts, but there are also many other communities online with active discussions going at all times.
Why Invest In Cryptocurrency
The cryptocurrency market as it exists today is over ten years old. It’s astonishing how fast it has grown. People are starting to believe that cryptocurrency is the future of money. The technology behind cryptocurrencies, blockchain, is also being used to solve myriad problems outside of finance. As awareness of the technology grows, prices will likely follow.
As an asset class, cryptocurrencies are delivering unmatched returns on investments that other asset classes can only hope to offer. Large institutional investors seem to realise this and have already entered the market. Therefore, you don’t want to miss out on this opportunity.
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What Do You Need To Invest In Cryptocurrency
While the idea of cryptocurrency can be daunting to beginner investors, the requirements to get started are minimal. If you want to learn how to invest in cryptocurrency, you only need:
Personal identification documents
Bank account information
Secure internet connection
Thats it! It is possible to purchase cryptocurrency through a stockbroker as well. In this case, most of your personal and financial information will be on file already. Now that you have what you need, lets start investing.
Cryptocurrency Meaning And Definition
Cryptocurrency, sometimes called crypto-currency or crypto, is any form of currency that exists digitally or virtually and uses cryptography to secure transactions. Cryptocurrencies don’t have a central issuing or regulating authority, instead using a decentralized system to record transactions and issue new units.
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Investors Buy And Sell Cryptocurrency On A Crypto Exchange
A crypto exchange is simply a digital service where you can exchange your CAD for crypto or, more likely, exchange one crypto for another. Though other ways of buying crypto exist , these methods arent currently available in all countries. For that reason, when investors are looking to buy or sell crypto, they will probably do it on an exchange.
As investors are scanning the market of crypto exchanges, theyll come across three different types: centralized, decentralized, and hybrid exchanges.
Some of the top crypto exchanges in Canada include:
Centralized exchanges are nearly identical to traditional stock exchanges. Investors give money to your CEX, place an order for a certain crypto, and the exchange finds a seller to match that order. The investor will pay the CEX various trading fees, and then they can store your crypto directly on the exchange itself.
The biggest shortcoming with CEXs is, well, theyre centralized, meaning investors have to use a middleman. In the minds of crypto enthusiasts, that pretty much defeats the purpose of cryptocurrency.
Security can also be a problem. Because investors give a third-party private information investors can open themselves up to a potential cyber-attack. Most of the biggest crypto hacks, in fact, have happened on CEXs.
As of now, most of the big crypto exchanges, such as Gemini, Robinhood, and Coinbase, are centralized exchanges.
What Is The Benefit Of Using This Strategy
If you opt for this strategy, you don’t have to worry about daily price volatility. The cryptocurrency market is highly volatile, and it’s not surprising to see prices change dramatically overnight. Also, you stand to win big for believing in a project and accumulating its tokens before its price blows up. This strategy doesn’t require much technical know-how and is suitable for many new investors.
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Advantages And Drawbacks To Investing In Cryptocurrency
Investing in cryptocurrency has a few advantages:
- Diversification: The value of cryptocurrency doesn’t appear to be correlated with the price of stocks, bonds, or other asset classes. That said, cryptocurrency has only existed for about a decade, so the data is limited in this regard. Theoretically, though, it makes sense that the price of crypto is unrelated to the price of traditional assets.
- Return potential: Cryptocurrency has produced extremely strong returns as adoption increases. Most people agree the expected return for a sound cryptocurrency investment is greater than that for stocks.
- Additional utility: Unlike stocks, some cryptocurrencies provide utility. Bitcoin, for example, can be used to pay for goods and services. Other tokens may provide access to projects or discounts on a project’s services.
But there are some big disadvantages for investors as well:
Know Your Crypto Lingo
There is a lot of jargon out there in crypto land and often it can be difficult to decipher.
Use this helpful list to make the most of the best crypto tips and dodge common cryptocurrency mistakes that could blow up your trading account.
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Is There A Good Time To Buy
There is no general rule when to buy cryptocurrencies. Usually it is not a good idea to buy in at the peak of a bubble, and usually, it is also not a good idea to buy it when prices are crashing. Never catch a falling knife, as the traders wisdom says. The best time might be when the price is stable at a relatively low level.
The art of cryptocurrency trading is a vast topic in and of itself, and determining precisely when a crypto is in a bubble and when it has reached a local bottom after falling is not an exact science. What is easy to say in retrospect is a hard question to answer in the present. Sometimes a coin starts to rise, and after it passes a key line of historical resistance, and many believe it to be at the peak of a bubble, the real rally just begins.
For example, many people did not buy Bitcoin at $1,000 or Ether at $100, because it seemed to be overpriced. But years later these prices now appear to be an incredible bargain that will never again appear to the market.
This is definitely not financial advice, but some general guidelines to help you decide when to make an investment include:
What Are The Types Of Cryptocurrency
Before cryptocurrency investing, it is essential to know the types. There are many different types of cryptocurrency systems that you can invest in. Bitcoin is arguably the grandfather of all crypto. It has been around for over 10 years and its the largest cryptocurrency system in the world, with a market capitalization of about $128 billion. Here are some of the other cryptocurrency you can buy:
Litecoin: Created by a former Google employee, Litecoin is very similar to Bitcoin, but has shorter transaction times and lower fees.
Ethereum: Its a cryptocurrency, but the main focus is on purchasing applications without having to pay a middleman .
Ripple: This is a cryptocurrency that doesnt use blockchain technology. Its mostly used by corporations to move large sums of money.
Cardano: This is a blockchain-based cryptocurrency thats used primarily to store private data.
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Differences Between The Stock Markets And Crypto Markets
- Owing to its old age, the stock market is more stable and less volatile. The crypto market, on the other hand, is accustomed to wild price swings. It is pretty normal to see double-digit percentage swings in a matter of hours.
- . Age is a significant factor in trading. The stock market has been around for a long time, while the crypto market is only about a decade old. This means that market value and trade volume in the former is much larger compared to the latter. The younger age also contributes to the wild volatility experienced in the crypto market.
- . In the stock market, you invest in the publicly listed company shares by buying their stocks. In the crypto market, you invest in the idea, the technology, or the currency , but not the company behind the currency.
- Regulations. Since the stock market has been around for ages, regulators have had enough time to develop and implement rules and regulations governing the markets conduct. This contributes to the minimal volatility we highlighted earlier. In the cryptocurrency market, this is not the case. The regulators are still grappling with understanding the emerging asset class, and this lack of regulations are part of the reason for the markets wild nature.