The crypto world is distinct from so many other markets, not least as the capacity to use cryptocurrencies in much the same fashion as fiat money marks them out as rather different from things like stocks, shares and bonds.
However, just like other items that are traded on the markets, values can fluctuate and the reasons for this can be numerous.
For example, much as shares in certain companies can plummet in value when a firm is struck by scandal or hit by a drastic change in circumstances, so this can happen with crypto.
The Volatility Of Crypto
For example, in January this year CoinGecko said that of the 24,000 crypto coins listed on the site, more than 14,000 have fallen by the wayside. You may have heard of some of these, such as Terra USD, Luna and BlockFi, which contributed to a major downturn in the market in 2022.
That said, CoinGecko also noted that the number of cryptocurrencies crashing and burning in 2023 was just 289, following thousands of collapses over the previous three years. This suggests that, as the market matures and those involved grow in their understanding, there will be much more stability.
Nonetheless, there will be currencies that fail and others will see their valuations rise and fall significantly for all sorts of reasons. This is a reason Volta Wallet holders should get good investment advice from experts in the field before they dive in at the deep end.
While experts may help with the details, you do need to have a general trading strategy anyway. This may include focusing heavily on certain cryptocurrencies in the hope they do very well, or having a wider spread of currencies to carry out swaps between. Given our facility to create up to 90,000 pairs, we have given you the tools to spread a great deal.
A key point to be aware of in any investment strategy, whether in Crypto or any other commodity, is that risk is a real thing.
Uncertainty Of The Indirect Kind
Uncertainty comes from many quarters, especially in a world of economic and political volatility. Sometimes this can be indirect, but sometimes direct.
There is no doubt the world has gone through a lot of uncertainty in recent times due to world events, like the economic shock of a pandemic and a surge in gas and oil prices following the Russian invasion of Ukraine.
This year has also been uncertain across the world because it has been a multiple election year. From the world’s largest democracy in India to South Africa, from the dramatic change in government in the UK to the febrile atmosphere around the snap French parliamentary elections, it has already been a very eventful year even before America chooses a president.
Direct Influences On Crypto Markets
The latter event may be seen as a cause of great volatility after what happened last time, but while political uncertainty and a close race (something that looks likely in the US but did not happen in the UK) can have an impact on markets, there can be more direct impacts.
For example, in the US there have been some questions about what the attitude towards crypto, its use and regulation should be. Cryptopolitan has noted that the Democrat National Convention has not addressed crypto at all, suggesting this might mean Kamala Harris could take a different line to Joe Biden’s “anti-crypto vibe” if she is elected.
That sort of uncertainty could leave markets in a very uncertain state, but it is not just in democracies that there can be interesting speculation and possible game-changing developments.
For example, Arabian Business reports that in the UAE a court ruling had decided that employment benefits can now be paid in crypto, though not yet full salaries. This, it suggests, “opens the door” for increasing crypto adoption in the oil-rich state.
That may be a significant game-changer in the marketplace because the UAE and other Arab states have been well known for large-scale investment in Western assets from property to football clubs, so full adoption could lead to a significant shift in the strategies of how sovereign wealth funds and the copious wealth of many individuals is invested.
Why Your Strategy Needs A Lot Of Planning
The above examples are just two of many that highlight why an uncertain world can have unknown implications for crypto markets and investments. Market movements can be hard to call.
Some may respond to this with a cautious approach, at least until a situation is clearer. Others may spread between low-risk investments while taking a bigger punt elsewhere.
What you should always do is think and plan a lot, take lots of advice from investment experts and be prepared to change strategy when circumstances warrant it.