What Are The Risks Of Investing In Cryptocurrencies
Investing in cryptocurrencies is essentially gambling and there are no guarantees that you will see what you pay in go up in value.
Cryptocurrencies are VERY high risk and a speculative investment, with limited track records and no underlying value.
There is also no guarantee that you can convert crypto assets back into cash, as it may depend on the demand and supply in the existing market.
Cryptocurrency firms aren’t regulated in the way that other financial firms are, meaning you won’t have any protection if things go wrong.
Experts advise that you should never invest in something if you don’t understand it.
Crypto Bank Heist Sees Bitmart Exchange Lose $196m
The CEO of BitMart has confirmed the cryptocurrency exchange has suffered a large-scale security breach, resulting in the loss of an estimated $196 million.
Sheldon Xia said any users impacted by the hack will be compensated, and that deposits and withdrawals will resume at some point tomorrow.
One security expert told The Independent that it is a modern version of a bank heist with arguably less risk and less effort, and warned hackers may be encouraged by its success.
You can read the full story here.
This is a modern version of a bank heist, one security expert says
Sec Approves Bitcoin Etf Opening Crypto To Wider Investor Base
After years of trial and error by would-be fund sponsors, cryptocurrency investing is finally opening up to the masses with the tacit U.S. approval of a bitcoin exchange-traded fund. ProShares, which filed for its Bitcoin Strategy ETF this past summer, may be the first to launch next week. Proponents of a bitcoin ETF believe the product will be more widely accessible for individuals interested in bitcoin than the actual cryptocurrency by giving investors a regulated alternative to the underlying digital asset.
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Cryptocurrency: What Is Cryptocurrency How It Works And Why Is Crypto Market Down
Everyone wants a piece of the cryptocurrency market right now but what is it and how does it work?
Cryptocurrency is all the rage among people these days, especially the younger demographic. Everyone wants a piece of it, or at least dabble in the space to spur their curiosity. But, what is cryptocurrency? How does it work and how do you get to own it? These are some of the basics questions that we try to answer over here so that more people know more about it, and make a sound decision based on facts rather than any marketing gimmick. Here is everything from A to Z you need to know about cryptocurrency.
Chinas Latest Comments Led To A Market Dip
The Chinese government has always attacked Bitcoin and other cryptocurrencies. The government has never made it a secret that they disliked cryptocurrencies and are determined to root it out in the country.
The authorities came out again to speak out against cryptocurrency mining and blast Bitcoin. Chinas state planner, the National Development and Reform Commission , said during a press conference Tuesday that it will continue to clean up virtual currency mining in the country. The agencys spokesperson Meng Wei blasted Bitcoin mining, stating that it consumes a lot of energy and generates a lot of carbon emissions. As a result, the NDRC is set to launch a full-scale clampdown on crypto mining in China and intends to eliminate the activity entirely.
Chinas latest comments on Bitcoin mining led to the broader crypto market embarking on a bearish run. Bitcoin lost more than 10% of its value earlier today and dropped below the $60k mark for the first time in weeks. The other leading altcoins, including Ether, Binance Coin, Cardano, Solana, Polkadot, XRP and Dogecoin, all lost more than 7% of their values. The total cryptocurrency market cap also dropped to $2.6 trillion after reaching the $3 trillion mark last week.
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What Makes Crypto Go Up And Down
For those who have been following the cryptocurrency market for some time, the situation and events of recent months will seem familiar.
Some random event, for example, Elon Musks tweet that Tesla will accept bitcoins, raises the price of the currency to new heights, and people begin to say that the general public is finally accepting cryptocurrency.
Then another random event occurs, for example, Musk changes his mind, after which the rate of cryptocurrencies falls again, and all conversations about general acceptance are forgotten.
Why Is Cryptocurrency Market Cap Going Down
Why is every cryptocurrency going down? When investors begin to buy cryptocurrency more actively during rapid growth, the growth in its value continues to gain momentum and at such a moment becomes so high that it becomes difficult for new investors to buy cryptocurrency with the same intensity as before but at a significantly increased price. At the same time, more and more sellers appear on the market who are interested in selling cryptocurrencies at a relatively high price. Consequently, supply increases, while demand decreases, which ultimately gives an impetus to the correction of the market to eliminate this imbalance. Also, its no secret that the actions of large players can have a significant impact on the rate of cryptocurrencies, which, in fact, happens from time to time.
Why is cryptocurrency going down right now? It is well known that rumors can lead to consequences that may be more significant than the consequences of the event itself. This is especially true for the open market for virtual money. Built on the principles of supply and demand, crypto depends on a positive news background, which to some extent encourages users to buy or invest. At the beginning of the article, it was said that crypto investors have not heard good news since 2018. Why cryptocurrency is going down now?
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Largest Evaporations Since September 2021
The cryptocurrency market witnessed one of the largest wipeouts in a few months, where assets worth $2.4 billion were liquidated. In the last 24 hours, the trading volume of cryptocurrency in the global market has surged to over $218 billion, which is an 80% increase. The overall market cap of crypto on December 4 has plummeted to $2.07T, which is over 17% down from the market cap on December 3, 2021. It simply means that due to ear of the depreciation of digital assets, investors have been trading to secure profits or simply exit the market to avoid total loss in case of a ban or other restrictions.
Indian Prime Minister Helps To Send Crypto Into Disarray With Call For Global Regulation Of Digital Currency
India has continued to make headlines in the weeks following the initial proposal. Earlier this week, it came to light that the nation plans on bringing about jail sentences for those found violating the proposed cryptocurrency legislation. But why is crypto down today specifically? Its because India is taking its crackdown to the world stage and calling on others to do the same.
The countrys Prime Minister, Narendra Modi, spoke at the U.S.-hosted Democracy Summit. The summit saw dozens of nations worldwide come together virtually to talk about a number of issues, crypto being one of them. In his speech at this summit, Modi called on other nations to follow its lead in regulating crypto. Modi would go on to say that cryptocurrency in its current state undermines democracies.
Modis speech is an obviously bearish signal for the asset class. The Democracy Summit saw massive turnout, with many European and African countries in attendance. If this speech resonates with these countries, it could certainly stifle the growth of cryptocurrency. As such, investors are seeing lots of price slippage today.
On the date of publication, Brenden Rearick did not have any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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Why Is The Whole Crypto Market Crashing
As Bitcoin is the biggest cryptocurrency, its value has a knock on effect on smaller coins.
Alongside the reasons outlined above, Twitters CFO Ned Segal also publicly denounced crypto, which could have affected investor decisions. He said that investing in crypto doesnt make sense right now.
Experts also predict that Bitcoin could continue to plummet.
Five Risks Of Crypto Investments
BELOW we round up five risks of investing in cryptocurrencies.
- Consumer protection: Some investments advertising high returns based on cryptoassets may not be subject to regulation beyond anti-money laundering requirements.
- Price volatility: Significant price volatility in cryptoassets, combined with the inherent difficulties of valuing cryptoassets reliably, places consumers at a high risk of losses.
- Product complexity: The complexity of some products and services relating to cryptoassets can make it hard for consumers to understand the risks. There is no guarantee that cryptoassets can be converted back into cash. Converting a cryptoasset back to cash depends on demand and supply existing in the market.
- Charges and fees: Consumers should consider the impact of fees and charges on their investment which may be more than those for regulated investment products.
- : Firms may overstate the returns of products or understate the risks involved.
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What Should You Do During A Market Correction
A 10% drop in the worth of ones crypto portfolio is sufficient to make a few financial backers stress. On the off chance that youre a present moment or informal investor with utilized resources, an amendment could appear as though they are deadly for your positions. In case youre not a specialist on exchanging, rather than yielding to automatic responses, it is ideal to comprehend that redresses will happen, and settle on a determined choice whether to hold or endeavor to exchange and benefit.
Its not difficult to settle on imprudent choices dependent on feeling, however, you should attempt to stay away from this. Revisions happen in the crypto market, however, they dont generally prompt bear markets. Rather than selling during a value drop, some long-haul cryptocurrency market cap clients decide to hold onto their crypto resources all things being equal.
Ensuring your crypto portfolio against the impacts of market redresses might be testing, yet entirely its certainly feasible. Since you cant pinpoint when a remedy starts, finishes, or transforms into a bear market, having an arrangement in the event is not an ill-conceived notion. It doesnt need to be intricate, however, it ought to set you up for future market rectifications. Here are a few different ways you can take advantage of your crypto resources during the market amendment:
Which Cryptocurrency Prices Are Down
Bitcoin is currently trading at $51,433 at the time of writing – up by around 2% since yesterday, according to Coinmarketcap.
Other cryptocurrencies, such as Ethereum and Cardano, have also dropped.
Ethereum, the second-largest cryptocurrency, is down by about 1.69% over the past 24 hours at $3,394, and Cardano has fallen 1.69% to $2.15.
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Whats Behind The Latest Bitcoin Drop
Many investors see Bitcoins price swings as part of the game, but volatility is tough for individual investors to deal with, Noble says. Like Yang, he warns against selling too fast.
While this recent drop is reminiscent of 2017s sell off, Bitcoins presence has grown a lot since then. New short-term investors who are selling their holdings in reaction to the drop may be influencing the continued dip in Bitcoins value, according to a recent report from Glassnode Insights, a blockchain analysis firm.
While fluctuations are expected, Noble says this swing is a bit out of the ordinary. I thought the market was maturing and these things would be less frequent and severe. Boy was I wrong, he says.
This particular drop was caused by a combination of factors that may have made this drop more severe, Noble theorizes, from excitement about low-quality coins, to negative remarks from Elon Musk, to Chinas latest crack down on crypto services. The accumulated response made this sell off all the more violent, says Noble.
He likens the drop to the stock market crash of 1987, from which the markets took months to recover. But because crypto moves a lot faster today than equities did in the 1980s, Noble says we may see a quicker recovery.
Dont panic and puke, Noble says. If you keep your positions small, you can try to tolerate the volatility.
Accounting Treatment Of Cryptocurrencies
Under current accounting guidelines, cryptocurrencies are most likely not cash or cash equivalents since they lack the liquidity of cash and the stable value of cash equivalents. However, the accounting treatment of cryptocurrencies is still uncertain as there has not been official guidance on the issue from the International Finance Reporting Standards or The American Institute of CPAs .
2014 Internal Revenue Service Ruling
In the US, IRS Revenue Ruling 2014-21 stated that holders of cryptocurrencies should account for them as personal property, with gains or losses on purchases or sales. The value of cryptocurrency holdings on balance sheets would be at cost or fair market value at the time of receipt. Therefore, with the rapid increase in price, sales of cryptocurrencies lead to enormous gains at the time of sale: just consider the capital gains taxes on buying Bitcoin at $100 in 2013 and selling it for more than $4,000 in 2017!
International Tax Treatment of Cryptocurrencies
Outside the US, accounting treatment of cryptocurrencies varies. In the EU, a decision of the European Court of Justice rules that cryptocurrencies should be treated like government-backed currencies, and that holders should not be taxed on purchases or sales. In countries such as Germany and the UK, cryptocurrencies are treated like private money and not subject to tax outside of commercial use.
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The I Newsletter Cut Through The Noise
Bitcoin and other leading crypto coins experienced a significant drop in share price after investors began dumping mining equipment as China announced fresh regulations.
- Bitcoin -2.42%
- Binance Coin -2.57%
- Tether -0.13%
- Avalanche -3.58%
- SHIBA INU -5.04%
It follows recent crashes brought on by Tesla making a u-turn on accepting Bitcoin as payment for its products and China clamping down on initial coin offerings, block exchanges and warned against speculative trading.
A further blow was dealt when China ordered Bitcoin mining in its Sichuan province to shut down completely and furthermore told banks to stop supporting crypto transactions, in a latest wave of restrictions on cryptos.
Now the countrys central bank, Peoples Bank of China, has effectively banned digital coins after announcing all transactions of cryptocurrencies are illegal.
The decision has already had an impact on the global crypto market.
This is whats going on in the world of cryptocurrencies…
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There have also been warnings around scams related to cryptocurrencies, with people losing vast sums of money.
You should never invest in something you dont understand and you should never put in money that you can’t afford to lose entirely.
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Why Is Crypto Down Today Indias Stance On Crypto Is Dragging Digital Currency
Cryptocurrency has been having a wonderful 2021 in terms of gains across the board. The asset class has certainly churned out its fair share of millionaires, seeing altcoins boom by thousands of percent, and seeing Bitcoin add over $30,000 in value since 2020. But alongside those gains comes a fair share of scrutiny by governments worldwide. China began its big crypto crackdown in the spring. The U.S. is seeing lawmakers meet over how the assets should be regulated. As cryptos falter today in a market-wide correction, investors are wondering, Why is crypto down today? To answer that, we can look largely to Indias ongoing crypto situation.
India is the newest nation to join the likes of the U.S. and China in increasing scrutiny over the runaway crypto market. Late in November, India proposed legislation similar to Chinas, cracking down hard on privately issued cryptocurrency. Also like China, the proposed legislature comes with a structure for the launch of an Indian Central Bank Digital Currency . CBDCs are a popular response among nations to the growing ubiquity of cryptocurrency. Of course, this is largely because they can continue regulating CBDCs and managing them much like traditional fiat.
Planb Still Bullish On Bitcoin Price
One of the few things to keep pace with the crypto markets growth over the last 12 months has been the follower count of PlanB, the pseudonymous Dutch analyst whose Stock-to-Flow price prediction model for bitcoin has been hailed for its accuracy.
PlanBs Twitter following has risen from tens of thousands to more than 1.6 million since this time last year, as cryptocurrency investors and watchers seek to garner insights into the market from his posts.
The S2F model he is most famous for puts BTC on a path to reach above $100,000 this cycle, though the latest crash has left some doubts over whether it can be reached. After a brief hiatus, he is back to assure his followers that he still has faith in bitcoin returning to new all-time highs.
Bitcoin realised cap still increasing after March $58.8K close .. you can not keep the ball under water forever, he tweeted today.
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