How to avoid the encryption risk of adopting digital assets?
The attitude towards the same thing often depends on the position of the parties involved, and volatility is no exception. Some people like it and some people hate it. For example, professional traders have different attitudes towards volatility than long-term investors. Professional traders love volatility because they are proficient in various investment strategies that allow them to arbitrage in price fluctuations. Long-term investors have always hated volatility, especially downside volatility that could cost them money.
The world's most popular cryptocurrency, Bitcoin (BTC), has far more volatility than gold or stocks, making it an ideal investment target for professional traders. For investors, buying low and selling high is the most ideal state, but it is also very possible to be trapped by taking orders at high positions.
At present, the price of Bitcoin is floating around $30,000, which is far below the high point of more than $60,000 at the beginning of this year. For conservative investors, they are eager to know where the risk points of cryptocurrency are. For investors with high risk appetite, they may be looking for profit opportunities in high risks.
“There are more and more ways to get exposure to bitcoin and cryptocurrency investments,” said digital currency pioneer Brock Pierce, who is running for the 2020 U.S. president.
Cryptocurrencies Are Increasingly Influencing Traditional Markets
At present, there are many small companies focusing on the field of cryptocurrency in the market, and more and more large traditional institutions have begun to set foot in the field of encryption. In addition to investing directly in cryptocurrencies, derivative products or funds, what other ways can investors gain exposure to cryptocurrencies?
According to media reports, many institutions have entered the encryption field. Among them, Tesla (TSLA) not only purchased $1.5 billion in bitcoin, but also stated that it accepted bitcoin payment, but later announced that it had suspended payment services due to concerns that encryption mining would affect the environment; BlackRock (BLK) Has been involved in Bitcoin futures investment; CME Group (CME) launched Bitcoin and Ethereum (ETH) futures; payment companies Square (SQ), PayPal (PYPL) and Visa (V) have also shifted their business focus to cryptocurrencies; business analysis company MicroStrategy (MSTR) has invested billions of dollars in Bitcoin.
Also included are mining chipmakers Advanced Micro Devices (AMD), Taiwan Semiconductor Manufacturing TSMC (TSM) and NVIDIA Corp. Nvidia (NVDA), as well as Riot Blockchain (RIOT), Hive Blockchain (HVBTF) and Bit Digital (BTBT) and other miners.
The degree of risk relevance of crypto risk to different companies varies. For example, the volatility of cryptocurrencies is closely related to miners, but not so much to payment companies.
Haohan, CEO of Apifiny, a global digital asset trading network, said: “Bitcoin, as an asset component of an institution, will be included in the company’s valuation, so for companies that hold Bitcoin on their balance sheets, currency price fluctuations will directly at risk."
When the price of cryptocurrencies rises, companies holding cryptocurrencies can not only realize asset appreciation, but also benefit from it. Usually when the price of Bitcoin rises, the trading volume of cryptocurrency also rises, which is very beneficial to the development of cryptocurrency trading platforms such as Coinbase Global (COIN).
Cryptocurrencies are everywhere
Now that more and more people are beginning to accept Bitcoin and other cryptocurrencies, it is difficult for businesses to completely avoid cryptocurrencies.
"Bitcoin's massive adoption shows that institutions are increasingly bullish on cryptocurrencies and blockchain," said Shawn Cruz, senior market strategist at TD Ameritrade. "Even if you go from one company to another, you can't avoid it."
From a volatility standpoint, large corporations are increasingly accepting cryptocurrencies. For example, from the perspective of cryptocurrency, a company in a non-crypto industry that accepts bitcoin for payment may have much less risk than a company that mainly invests in cryptocurrency. In addition, companies that are greatly affected by Bitcoin price fluctuations may use financial strategies to hedge risks.
Likewise, market volatility can be a good thing.
Brock Pierce pointed out: "Many people see Bitcoin's volatility as a feature rather than a flaw, and as the asset class has multiplied, people have been able to find good buying and selling points in the volatility."
Reasonably avoid encryption risks
If you want to find opportunities to invest in encrypted assets, you must not only do your homework and keep a calm mind, but also have clear investment goals, have risk tolerance, and rationalize investment expectations.
As Shawn Cruz advises, long-term investors should not rely on media reports when making investment decisions.
"Just like investors want to avoid the risks brought by cryptocurrencies, they cannot be solved by changing companies. If investors keep chasing and investing in the latest crypto-related companies in the investment market, it is likely to cause unnecessary losses. said Shawn Cruz.
