PITFALLS OF THE CRYPTO MARKET
The topic of investing in cryptocurrencies in 2021 has become more relevant than ever before. Of course, bitcoin and altcoins set new value records almost every week. However, it is possible to lose the last of your money in pursuit of a possible capital increase. The head of cryptocurrency exchange J2TX tells about what people who want to invest in “crypto” should keep in mind.
The main risk of investing in cryptocurrencies is the unregulated nature of the market. If we look at any financial market, be it stocks/fiat currencies/futures/bonds and so on — all these instruments are clearly regulated by states according to a common strategy that all countries adhere to.
If we talk about the cryptocurrency market, in some countries (such as the U.S., for example) the regulation of cryptocurrencies is already taking some forms (there are already officially registered companies working with cryptocurrencies, there is an understanding/forms and outlines of the market).
If we are talking about developing countries (including the CIS countries and Russia), then here every company balances on the verge of legality. On the one hand, the company cannot register officially, as there is no legal framework, on the other hand, the company needs some official documents to operate. That is why many choose to register in offshore companies; some do not register at all; that is why there is an increased risk of investing into a company which will not be responsible for its obligations.
In addition, there is the risk of volatility. If you invest in a cryptocurrency asset, you have to be prepared for the fact that its price can fall by multiples. Let’s take bitcoin as an example. Those who took bitcoin in 2017 at $20,000 and saw it a year later at $3,000 and didn’t sell (that is, were mentally prepared for their asset to be in a drawdown of more than 80%), they are now in the black, having earned +200% to their investment in three years.
Another risk is technological sophistication. Because cryptocurrency works on blockchain technology, and this field is developing by leaps and bounds (new technologies, new blockchain applications, new competing companies appear every day), a cryptocurrency that seemed promising a month ago may lose its relevance in a month or a year. So you have to be prepared for the fact that if the technology you invest in is not ready for adaptation and development, you may lose the money you invested in it. By technology here we mean the specific company and the cryptocurrency behind it.
A safe exchange J2TX, which not only sells and exchanges digital coins, but also provides its users with the most reliable and necessary information, will help to avoid problems with the cryptocurrency market.
J2TX is a step into the world of trading and safe transactions!