Throughout time, cryptocurrency is only becoming more popular. Investors are rushing out to get a piece of this fantastic form of digital currency. Websites such as CoinJournal are also making it easier than ever to learn about buying and using cryptocurrency.
After a recent pullback in prices across the cryptocurrency market, some investors are eyeing the declines and using it as an opportunity to buy in. If you’re ready to invest, here are three reasons you should.
Increased adoption from institutional investors
Recently, one factor making a difference from previous cryptocurrency prices is the broad adoption amongst institutional investors. As part of their portfolio, more and more financial institutions are creating a position in Bitcoin.
Institutional investors do create a big buyer in the market. However, they also work to effectively remove a large supply of Bitcoin from trading. As many people know, Bitcoin has a fixed lifetime supply of 21 million coins and miners can only mint 6.25 Bitcoins every 10 minutes or so.
Earlier this year, institutions were quickly buying up the supply. This was done at a rate so quick, that they were buying more than what was being created. This then resulted in a huge surge in price for coins that are still in circulation.
As of now, there is also a huge push toward bitcoin ETFs that are making it far easier for retail investors to gain exposure to the cryptocurrency in a regular brokerage account. In the near future, this could result in an even bigger demand for Bitcoin among institutions.
It is a perfect form of diversification for stock investors
If your portfolio largely consists of stocks, Bitcoin and other forms of cryptocurrency can offer a great form of diversification. The price correlation between the U.S. stock market and cryptocurrencies is impeccably close to zero. That means that neither is affected by the other.
This is something that could definitely work in your favor. As a result of the above, you could easily improve your diversification by allocating a portion of your portfolio specifically to cryptocurrency. This will result in the cryptocurrency increasing the volatility of your portfolio too.
Remember though, if you cannot handle wild price swings and uncertainty, be sure to allocate only a small percentage of your holdings to the asset class.
Cryptocurrencies are marked by high liquidity
If you’re still questioning whether or not crypto trading is for you, then think about this great reason to invest. Cryptocurrency is easy to buy and sell which is why it is marked by high liquidity. With Bitcoin, for instance, there is always an increasingly high demand for it because it is the king of all cryptos.
In fact, data shows that the number of cryptocurrencies in wallets in the last year alone has increased to more than 54 million. Crypto trading is also highly accessible. It is not only big investors and large businesses that are willing to buy it now. Realistically, cryptocurrency trading isn’t rocket science or a mysterious venture that is created for the know it all’s of the industry.
It is just as easy for you to begin investing as it is for the big whales of the industry.
Cryptocurrency investment can lead to high returns
One of the main motivators that causes people to invest in cryptocurrency is the possibility of making a profit. Many people don’t like to admit this, but money makes the world go round and is one of the top reasons people invest in cryptocurrency.
Now, there is no promise that you will make money. In fact, some people lose their money. This is because cryptocurrencies are highly volatile. So, while one may be achieving high returns, another could be losing out.
It is never too late to begin investing in the cryptocurrency market. With so much great information out there, you have no need to be worried anymore. Investing in crypto is a great way to grow your wealth, learn new financial tricks, and diversify your portfolio.
Blockchain technology makes it more secure than ever, meaning that if you’re not already investing in crypto, you’re not investing right. Diversify your portfolio today by investing in the cryptocurrency market.
