Since the cryptocurrencies have been hitting the market analysts are always left with one question, how reliable these currencies are?
Since the cryptocurrencies have been hitting the market analysts are always left with one question, how reliable these currencies are? The risk associated with them is certainly a cause for concern because their market cap has increased noticeably. According to the Coinmarket cap, these digital assets have surged from $18billion to $180 billion this year. Some of these currencies have been through their lows as their values have depreciated significantly.
Ways in which investors can profit
Charles Hayter, co-founder, and CEO of digital currency platform CryptoCompare says their choice depends on their risk tolerance and future prediction of market trends.
1.Follow the stocks
For this strategy, it is very important for an investor to follow the market, which, is a bit challenging. After the research, an investor needs to buy a share when its price is falling down. “Buying a dip in a crash can be difficult,” emphasized Yazan Barghuthi, project lead at blockchain company Jibrel Networks, “because when do you know it has bottomed out?” He said this after seeing the trend in bitcoin. It’s value dipped considerably after 2013. Petar Zivkovski, COO of digital currency platform Whaleclub said “Buying the dip only works in a general bull market.If the global trend reverses, buying the dip is useless.”
2.Carefully value every asset
Even if the broader assets are crashing there may be some assets that are holding on. Marshall Swatt, founder, and CTO of Coinsetter, which was acquired by Kraken, says “Just like the NASDAQ bubble, there will be companies and tokens that go on to be very successful, perhaps a future Amazon” Vinny Lingham, CEO of Civic, suggested that investors “find quality coins with teams you can trust to execute and weather the storm” and then hold. Swatt suggests that investors should look for currencies having the solid base and that offer promising business models.
The scheme is called HODL which is Hold On to Dear Life. Essentially, this implies purchasing digital money and holding them for a significant timeframe, not paying attention to their fluctuations. Zivkovski suggests investors using HODL approach should hold on to top five cryptocurrencies according to their market value.
4.Going back to Fiat currencies
Tim Enneking, managing director of Crypto Assets Management frequently uses this approach when there is a dip in digital assets. Swatt believes this approach is much easier than done. “Exiting to fiat requires that you be able to time the market, both when you exit and again when you return,” he said. “The smartest strategy is to allocate the money you can afford to put at risk, and then stick to your plan regardless of the variations in the market.”
This approach is same as shorting stocks. Many exchanges offer to short Bitcoin and if done properly it can return very good value to its investors. Bitfinex, Poloniex, and Kraken all offer this functionality. Before strategizing in an effort to profit each investor should perform proper market research.
Disclaimer: This is not an investment advice. It is of paramount importance that everyone should do his or her own due diligence before investing in any product, platform, tokens etc. Cryptocentral.io does not endorse any content or product published on this page. Our aim is to simply provide all the readers with the latest information in the field of cryptocurrency / blockchain industry that might be of interest to our readers.