It is so secret that crypto assets are used much more these days. With tokens like Bitcoin reaching the coveted $100,000 price point and many new options entering the market, consumers are rushing to cash in. This is even more so, given how intertwined crypto has become with the mainstream financial world and politics.
Not only do major corporations like PayPal and Microsoft support crypto, but the last US Presidential elections saw digital assets become a significant consideration point for candidates and voters. According to reports, new crypto trading accounts shot up by as much as 26% in the days following the election results.
Even with this increased interest in crypto, investors are always advised to be sensible in their decision-making. Specifically, they are told to stay informed about the markets by turning to trusted new sources and experts in the field. By doing so, they will deduce the best times to buy, what tokens are most promising, and how to be responsible with their tokens. They should also look towards a trusted crypto marketing enterprise like Crypto Agency as they help bring promising and vetted projects to the forefront. By doing this, they can ensure that the projects they invest in are translated well to the public and kept compliant for the best results.
Specifically, some worry that the growing use of crypto as an investment vehicle alongside mainstream assets will trigger a meltdown reminiscent of the 2008 economic crash, which ironically inspired the creation of Bitcoin.
A Federal Reserve Bank of New York report noted that leverage trading (borrowing money to invest in crypto and maximize gains) could become an issue over time.
“If enough people begin investing in those firms, it could put substantial strain on household budgets, leading to higher delinquency rates,” the report notes.
It also states that the ZIP codes with the biggest crypto holdings have also reported a spike in mortgage loans that could hint at bigger crypto investing.
It is not unusual to hear of people in New York losing money to crypto or falling for crypto-related scams. However, this tends to be a small fraction of the larger market.
However, while the report worries about crypto’s long-term implications, industry stakeholders agree that crypto use will only become more prominent. Besides the obvious financial aspect, digital assets are entering the government sphere. President-elect Donald Trump, for example, has hinted towards creating a U.S. bitcoin strategic reserve, which has some excitement. Others point out that this linking of crypto to the US financial structure will sideline smaller investors, many of whom turn to crypto after being excluded from the mainstream financial world.
This also shows that while cryptos can be used as currencies and investment tools, most of the emphasis seems to be on the latter.
As Federal Reserve Chairman Jerome Powell recently said, “People are not using it as a form of payment or as a store of value.”
With this investment comes the apparent risk of loss but also theft. Crypto exchanges are routinely targeted by hackers, even state-sponsored ones. And if an exchange is compromised, there is no guarantee that victims will be compensated. Once again, crypto users are advised to leverage credible information sources, practice good wallet security, and only invest money they can lose.
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