Mexico City — Investing in cryptocurrencies comes with risks. Its high volatility means that investors who decide to buy this type of virtual assets can obtain a high return in a matter of minutes, but also lose everything in a second.
According to the CoinMarketCap portal, there are more than 8,836 digital currencies; but there are only 10 that stand out for their market value: Bitcoin (BTC), the most popular cryptocurrency on the market; followed by Ethereum (ETH), Tether (USDT) and Binance Coin (BNB) are a few.
However, the return of virtual currencies does not necessarily depend on their size.
In the last month, considered from December 5 to Wednesday, January 5, Bitcoin lost 12.47%; while Terra, the ninth cryptocurrency with the highest market value, presented a return of 13.87%, according to data from CoinMarketCap.
“It has to do with a volatility issue,” independent investor Cipactli Jimenez told Bloomberg Linea . “They will definitely have the same movement as Bitcoin, but they won’t do it in the same range.”
The analyst mentioned that the higher the market value a cryptocurrency presents, the more complicated it will be to move the money.
Chainlink, based on Ethereum, presents a return of 19.14% in the period indicated; but its market value places it in the 18th position of the largest cryptocurrencies.
According to Jimenez, the trend of most cryptocurrencies will follow Bitcoin, but they will not do so in the same proportion.
“The fundamental appeal is how much you’re going to earn from each and how much risk exposure you’re going to have.” Cipactli Jiménez, independent investor
The volatility margin of the most popular currency in the market presents a smaller range; however, the digital assets with greater stability are those known as stablecoins, which is a stable cryptocurrency associated with the value of a ‘fiat’ (such as the dollar or the euro), real estate or material goods.
Stablecoins will seek to replicate the value of the dollar one by one. In the market you can find Tether or USD Coin, linked to the dollar.
Cryptocurrencies are virtual assets that the blockchain uses to secure transactions. They can be stored in physical devices called wallets or physical wallets; but they will have no physical presentation.
Investment experts recommend knowing the type of assets in which you will invest; for example, when buying stocks, they suggest reviewing financial plans or thoroughly reviewing the company in which they will be invested. In the case of cryptocurrencies, this step is limited because the information of the digital currency is unknown.
“The cryptocurrency ecosystem does not have any fundamentals,” Jimenez said, “it will be the usability that the market can have by a principle of adoption.”
The example is the use of Bitcoin as a bargaining chip in El Salvador.
Warnings about investing in cryptocurrencies permeate the environment, since they are high risk due to the high volatility that precedes them. In some cases they are considered speculative investments, this is when you seek to benefit from changes in the price in a certain period of time.
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