Cryptocurrencies are notoriously volatile assets, often succumbing to the obscurities in crypto markets. While, according to CoinDesk data, bitcoin had dropped to as little as $42,202.35 on 17th March, on the contrary, the crypto’s value surged by 7% today. Investing in cryptocurrencies is highly speculative since the market projects an unregulated pattern.
The idea of a cryptocurrency is not faux, but the entire backend process of how it is dealt with remains murky. Unlike the euro, dollar, or pound, cryptocurrencies are not regulated by a central bank. The lack of transparency in the crypto-coin market and the absence of a visible regulating system make it subject to whims and fancies of fraudulent activities.
Benefits And Drawbacks Of Cryptocurrencies
The quickest way to lose money is to invest in something that is already hot. Cryptocurrencies are challenging to comprehend, especially if you’re not tech-savvy, and because it is hard to comprehend, people are often wary of the pros and cons of cryptocurrency.
The crypto market fluctuations are unregulated, and there is no ironclad security to your cryptocurrency investment. The Bitcoin value started to surge after hitting an all-time low in February 2021, when Tesla CEO Elon Musk announced that Tesla would no longer accept payments in bitcoins. A Cryptocurrency has no intrinsic value and is capable of being valued at anything but zero. This uncertainty and fluctuations in the crypto market make the currency vulnerable to malpractice. As a digital technology, cryptocurrency is always vulnerable to cybersecurity breaches and hacking.
Cryptocurrency is a two-end process under which users are not subject to traditional banking fees. For instance, no returned deposit fees, overdraft charges, account maintenance fees, or minimum balance is not required. The cryptocurrency purchases are discrete and unless the user voluntarily published the details of the transaction. However, the transactions are not completely anonymous or untraceable, and these transactions are readily linked to the personal identity of the individuals involved in the transaction.
Technical Analysis In Trading Cryptocurrency
To excel in digital currencies, traders can benefit by paying benefit to the technical factors. Cryptocurrency technical analysis aims to foresee and predict future market behavior based on historical volume data and price action in the crypto market. This approach has been applied to stocks and other traditional markets and has been proven to become an integral component in the operations of cryptocurrencies.
While fundamental analysis considers multiple factors, technical analysis strictly examines historical price action. Technical Analysis is utilized to study fluctuations and volume data around the price of an asset, allowing traders to identify trends and favorable trading opportunities.
During the early stage of testing, technical Analysis was based on manual calculations. Still, with the involvement of technology and modern computing techniques, it has become an important tool utilized by many investors and traders. One of the pivotal advantages of technical analysis is identifying signs of price trends in the volatile crypto market, helping investors locate an entry and exit point.
Even after the 1.5 billion dollar investment by the self-proclaimed “TechnoKing” Elon Musk, financial firms like JP Morgan Chase denounce the idea of cryptocurrencies like bitcoin as a “Ponzi scheme.” With no knowledge of the current market trend or technical Analysis of the cryptocurrency, an investment in the digital currency market poses an outright risk and is analogous to walking over eggshells.
The cryptocurrency is like a bubble scheme, luring people with overnight success dreams and an easy wealth concept. With some cashing out of the idea, the cryptocurrency Ponzi scheme is dangerous, often leading to grotesque outcomes. But there are financial giants like Visa allowing payment settlements using cryptocurrency.
Moreover, now BNY Mellon, Mastercard Inc, and many others allow cryptocurrencies for payment and investment purposes. With the growing ease of use and accessibility, the time is swiftly approaching when cryptocurrencies will overtake monopoly in creating money.