Good and Bad Explained: Funding in Cryptocurrency Market 

 July 4, 2021

As the cryptocurrency market grows, investing in virtual coins has become much more comfortable than it managed to be a few years ago. While interest has peaked after the cryptocurrency boom of 2020, several critical issues need to be addressed. 

Investing in crypto has become a topic of discussion over the past few weeks due to the significant level of volatility seen in the virtual coin trading space — several rounds of ups and downs have been witnessed in the crypto market in two weeks.

Another crushing period of volatility hit cryptocurrencies and directed to a noticeable erosion in the business capitalisation of hot virtual coins. It was primarily due to China’s tight crackdown on cryptocurrencies and Tesla CEO Elon Musk’s tweets about the environmental impact of mining the virtual currencies.

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But anyone who has been spending in cryptocurrencies will notify you that drastic price changes are required in the cryptos and may increase as values continue to rise. In addition, you may visit the bitcoin lifestyle to check the latest on crypto price movements.

Let’s consider the rise and fall of Bitcoin over the years to understand the dynamics of the crypto trade.

The crypto business was almost non-existent a decade before meanwhile Bitcoin, the first digital coin, appeared. In 2009, its worth was $0 after it was introduced. However, it was only two years following that the price of Bitcoin touched $1 for the first time, and in two added years, Bitcoin’s value amounted to $1,000.

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In 2017, it leapt to almost $20,000 but plunged to $3,300 levels in shorter than a year. Moreover, while Bitcoin was kicking all these breakthroughs, it encountered critical periods of volatility. For instance, when the virtual coin bounced to $30 in June 2011 but nosedived to $2 by November in the same year.

Similarly, Bitcoin had shifted to $350 by April 2014 after scoring $1,000 for the initial time in November 2013.

All of these cases show that volatility is enormous in the crypto market, not just in the event of Bitcoin but all the other ‘altcoins’ that have surfaced after it. Go to the bitcoin era review for a quick update.

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Interpreters say that the cryptocurrency exchange has emerged drastically from a decade ago and is gradually becoming mainstream. Though it is far from substituting conventional currency, it has expanded traction among more modern investors over the past few times.

cryptocurrency market
cryptocurrency market

Easier To Invest, Logical Price Movements

While investing in cryptocurrency remains a tricky space, the good part is that price movements are no longer unexplained or without logic.

Wild price fluctuations in the crypto trading space now have an underlying reason — a tweet from an influential shot crypto backer or a nation enforcing regulatory acts. Earlier, price movements in the crypto trading scope were very hard to foretell and driven principally by factors that weren’t quickly identifiable.

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This is why there is still no firm explanation behind the insane rise in the cost of Bitcoin in 2017 and the consequent plunge in a year. However, a research report from 2018 implies that much of Bitcoin’s flood in 2017 was due to exchange manipulation.

 Another reason cryptocurrency trading has become more accessible is that there are more crypto exchanges throughout the world. People can quickly create an account using their phones and start funding.

Some crypto-dedicated apps even enable investors to make portfolios, which assists in diversifying assets. In addition, it will encourage investors to invest in a pool of cryptocurrencies, providing them with a future to maximise their profits while decreasing overall uncertainty.

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Another determinant that has given cryptocurrency trade a favourable boost is that more critics are now contributing insights on advancing the market — something that was not possible a few years back.

Crowding without Regulations 

From being a niche asset for essentially tech billionaires and coders, cryptocurrencies have come a significant way, with millions presently investing in virtual coins. However, some critical problems limit cryptocurrencies from maturing as a favourable asset category.

One of the most significant problems is the absence of concrete regulations. Governments worldwide are still apprehensive about cryptocurrencies is why there is a slight adjustment to limit the wealth of investors who put the fund in virtual coins.

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Without an ordinance, investors are dubious about getting their money back in the case of a scam or any other matter of fraud. However, this is just one of the obstacles that cryptos face without control.

In the absence of government regulation, it isn’t easy to finance cryptocurrencies, even if they are legal. For example, crypto exchanges in India face challenges while administering with banks.

Most banks in India are not ready to act with crypto exchange policies. As a result, UPI businesses still don’t run on these apps, adding that deposits and withdrawals are often paused.

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Banks are not providing them with the opportunity to receive deposits appropriately, and if the banking system doesn’t encourage crypto platforms, how they can operate adequately? 

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It is worth mentioning that lags in essential transactions can be a determining factor in the world of crypto trade, where value changes are rapid.

While cryptocurrency trade remains legal in India, it is unregulated has prompted many interested traders to take a step back. Unfortunately, the situation is the same in many other nations around the globe.

Another significant issue that cryptocurrency investors have to trade with is crowding. There are now thousands of unchecked virtual coins in the business — some of which toil no purpose and are formulated just for pleasure or even to display hate.

The disturbing factor is that many novice investors end up spending in low-value cryptos assuming they are valuable. Critics, however, make it very obvious that such coins have no long-term benefit and are likely to fall after a period of rapid surge.

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Conclusion

The next level of evolution in cryptocurrency trade entails generating awareness between investors. Since it is an uncontrolled market, there are many systems in which investors can be deceived, and lingering caution is the most reliable way to address cryptocurrency trade. However, given the more unusual volatility included, investors should remain patient, acquainted and knowledgeable of emerging drifts.

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