As a means of securing capital with profit performance, investments had been a reliable source of passive income for several centuries. Ten years ago the world saw a new investment vehicle emerge in addition to gold, real estate and mineral resources – cryptocurrencies. Coming first was bitcoin whose success was ardently disputed but it continues to grow and shape the market: today we have the Top 100 global currencies and various schemes to invest therein, stimulating the industry.

Multiple useful implementation options, high security, no inflation and no regulation by a single digital bank, and a number of other drivers appeal to investors:

  • New players from China and India join the investment scene: for instance, following the President of China announcement about blockchain support in October 2020, BTC appreciated by 40% within 24 hours
  • The cryptocurrency market applies the same laws and principles like the stock exchange, and there is also technical analysis enabling to calculate risks, pick the right time for investments and outline a strategy
  • Accessibility of digital currencies is being improved thanks to the installation of payment kiosks in the street and the use of new money storage tools; mining is gaining pace
  • Major international online stores began to accept bitcoin payments, thus popularizing the currency and winning the trust of customers

What is the starting point for a potential investor?

My advice is:

  • to have a general knowledge of crypto currencies, mining, trending coins and the market situation at large;
  • to decide on the investment amount and draft a strategy;
  • to choose a trader or a consulting company to support you in all stages, performing the analyses, mitigating risks and identifying the most efficient strategy.

What are the potential investment risks?

Some experts compare crypto investments with MMM (A financial pyramid operated in Russia from 1989 to 1994), calling them a lottery since the issue is backed by nothing but the faith of the crypto community in the brighter future and is not subject to government regulation, particularly in the CIS countries. On the other hand, this is an upside influencing the profit margins: for instance, this kind of income is not taxable in Switzerland.

Like any other high-income instruments, cryptos are associated with high risk although potential dividend rates muffle “the voice of doubt and fear” in the investors’ minds.

An abrupt exchange rate slump following a continued growth, however, may also make a “tough game” for investors and wreak panic among them. That’s where advisors come in handy: they will provide a competent explanation of all the nuances which may be involved in investments. Bitcoin is a vivid example of the “bullish” trend in 2020 notwithstanding all the global processes. Quarterly analytics at the beginning of the pandemic, however, reveal massive drops which had made investors nervous, although the situation stabilized by summer.

Current market situation

In the last 12 months the cryptocurrency market capitalization increased almost fourfold, reaching $764 billion. The total value of all altcoins apart from bitcoin appreciated from $60 billion to $225 billion – by more than 270%. Like many other industry experts, I believe that this trend will persist in 2021.

According to a Ton Weiss, former analyst for investment banks Bear Stearns and JP Morgan, the first cryptocurrency’s rate could reach $100 thousand next year based on the most cautious forecasts, or $200 or even $300 thousand in a favorable development. The prognosis is quite futuristic but still, it may prove true.

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Why do I use the example of bitcoin? The first crypto outstrips all subsequent cryptocurrencies by a huge margin and is currently the most secure, mobile and extremely popular with small-scale and Ranking next are Ethereum, Ripple and Litecoin which I advise to consider: in fact, this is a great opportunity for those not capable of keeping pace with bitcoin but willing to enter the market. The average weighted rate today is $138, an affordable amount for novice investors.

The big picture looks as follows at the start of the year:

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Cryptocurrencies are definitely bound to appreciate, but there might be periods of non-essential recession. One should also keep in mind that long-term investments (1+ year) deliver returns to investors and virtually never fail. However, competent and safe crypto investments require the support of a legitimate company holding all relevant licenses because fraud is spreading at a great pace in this segment regardless of all the safeguards implemented by crypto creators: experienced scammers simply play on the investors’ lack of knowledge and human feelings.

So how does one distinguish between a fraudster and a certified licensed company? Requirements put forward for account registration/wallet creation for crypto transactions are the key indicator: the fewer and simpler they are, the riskier the “establishment” is; while rigorous identity checks and investor requirements are indicative of a reliable platform. My personal advice: always scroll down to the footer, trustworthy companies always cite their licenses and permits there.

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