All those beginners who want to invest in cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), in 2020, have a couple of tasks ahead of them.
The first is to identify personal goals and one's predisposition to risk. The second is, of course, to understand which cryptocurrencies are eligible. But the characteristics of the blockchain and digital asset market make it difficult to make accurate predictions. Among manipulating whales, unpredictable news and irrationality of the traders, raise the hand who guesses at least 60% of the predictions.
Give up then? It is not always the case. Investing in cryptocurrencies in 2020 could prove profitable, just like what has happened in the past years to those who have managed to run their wallets correctly. So let’s present you with some tips you have to do.
Stocks, commodities, indices, derivatives, real estate, etc. Is it really worth investing in cryptocurrencies in 2020, given that alternative financial assets to bet on abound? It depends. The volatility of the digital currency market offers excellent trading opportunities. The price hikes that characterize the sector mean a generous profit when the trend is positive and, making use of short selling, even in the event of a downtrend.
Nevertheless, it is essential to always be alert and up to date: the best investors do not underestimate the impact of the news, thus managing to predict the market trend in the short term and sometimes even long term. It goes without saying that you need to know the history and characteristics of the cryptocurrencies of your interest - and the most related ones, starting with Bitcoin - to understand which and to what extent news can influence.
Do you intend to engage in short-term trading or do you have hodling in mind? How much of your capital do you want and can you commit to in the cryptocurrency market? Can time, energy and nerves manage price hikes and uncertainties in this industry?
Don't underestimate these questions. Because many traders intending to invest in cryptocurrencies in 2020 will earn at the expense of those who have tried without clear ideas in an exhibition on cryptocurrencies and then, taken from despair, threw in the towel.
If you intend to make profits on the price movement you are in the right sector, but you must have enough time to implement the appropriate strategies and follow the changes in the market. On the other hand, if you are a hodler you must identify the cryptocurrency, to be put in the wallet with the relative certainty that they will increase their value.
Without repeating again that investing in cryptocurrencies in 2020 is risky because the market is ever changing... let's try to understand if some digital currencies appear more promising. As already pointed out in the past, the answer seems to be yes.
Bitcoin, to begin with, is the undisputed king of the market and with halving it seems almost certain that its value will go up. Since its digital currency number 1 has the rarity, which several altcoins do not have, and the interest of investors. Despite the price drop of the last period, the hashrate continues to rise, as does its dominance.
Ethereum is experiencing the transition to more efficient Ethereum 2.0, plus its blockchain is a riot of smart contracts. Those who want to use them, you know, need tokens, so it seems plausible that the most important altcoin will continue to be. Furthermore, if it is true that Ethereum are not as rare as BTC, it is unquestionable that the transition to point of sale (POS) or point of purchase (POP) will also attract younger generations and hostile to the energy waste of the Bitcoin blockchain.
Bitcoin Cash (BCH) and Bitcoin Satoshi Vision (BSV), for those who want to invest in cryptocurrencies in 2020, could perhaps represent an alternative or a diversification of the Bitcoin wallet. It is easy to note, in fact, that the correlation of the 2 altcoins with the cryptocurrency number one is often expressed with an amplification of the price movements with respect to the latter, in the same direction. There is no shortage of strategies to take advantage of it.
Bitcoin derivatives, with a view to investing in cryptocurrencies this year, are important for two major reasons.
First, it has been noted that the underlying prices appear to be affected by the monthly maturities of the futures listed on the New York Stock Exchange (NYSE) and the Chicago Mercantile Exchange & Chicago Board of Trade (CME Group). More exactly: as the expiration approaches the end of the month, Bitcoin usually - attention: there are exceptions! - loses value, after the expiration instead it recovers.
Second, trading with derivatives, especially now that options also exist, allows hedging strategies to be implemented as well as opening positions without preliminary exposures on the underlying. Indeed, with CME futures, liquidation is cash. Indeed, the market for these derivatives appears increasingly flourishing.
In a nutshell, investing in cryptocurrencies in 2020 could be profitable, but the risks should not be underestimated. In any case, how many investments do you know that are 100% safe and really profitable?