Why Cryptocurrency Is Considered A High-Risk Investment And Is Often Compared To Gambling

cryptocurrency high-risk investment compared with gambling

The demand for cryptocurrency continues to grow not only among retail but also among institutional investors. Many companies are launching a digital asset custody service that targets hedge funds and asset management companies. The number of those ready to invest in crypto units keeps growing every day. 

Many people think that such an investment in cryptocurrency and gambling in a $1 deposit casino Canada are similar, but it is worth noting that buying crypto assets is different from investing in traditional financial instruments. In this review, you will find out why investing in cryptocurrency has nothing in common with gambling and is associated with bigger risks. So is cryptocurrency gambling? Let’s try to figure out this crypto risk profile together. 

Risks Of Investing In Cryptocurrency 

According to a recent survey by the Gemini crypto exchange, 14% of Americans have already invested in cryptocurrency, and this number may double by the end of the year. Of course, from one point of view, buying crypto assets is similar to gambling — it deals with some risks. However, you cannot compare the risk level of the two. When it comes to investments, there is much more for you to worry about with cryptocurrencies involved. Why investing in cryptocurrency is not gambling? Here are the 3 main risks associated with buying cryptocurrency. 

crypto risk

#1 — High Volatility 

Volatility helps you make predictions and bets based on previous fluctuations in value. But there may be great danger. The strongest moves in the market occur after a period of very low asset volatility, where market participants step in as soon as the occasion arises. It is at such moments that you can earn the most, especially when large players enter the market. And that's where emotions come into play. If prices rise, then the greed of traders grows. But when prices fall, their fear reaches the top level. 

#2 — Improper Storage 

One of the most common types of improper use of cryptocurrency is storing coins on your own. In this case, it is you who should fight hackers, protect yourself from losing your money, etc. Computers break down; USBs can get lost. It is also unsafe to store crypto on exchanges. 

#3 — Errors 

When Sending Funds According to financial analysts, Blockchain is a decentralized network with no managers, administrators, or support services. Therefore, when transferring crypto coins, you have no right to make a mistake because the chances of returning the money when transmitted to the wrong recipient are zero. 

The Rapid Growth Of Cryptocurrency Markets 

If investing in cryptocurrency is such a risk, why is the cryptocurrency market on the rise? The main reason for this growth is a sharp increase in the withdrawal of coins from exchange platforms to noncustodial wallets, indicating that the so-called whales accumulate coins and focus on long-term storage. 

Also, among the growth drivers were the expectations of the approval of the Bitcoin ETF in North America after the SEC's attitude to this business was clarified. Elon Musk's statements about the absence of plans to get rid of the first cryptocurrency by Tesla and SpaceX, as well as the possible return of the option to pay for electric vehicles for bitcoins have somehow led to the situation we are in today. According to experts, all this time, support was provided by favorable sentiments in the US stock market, leading to the increase of the cryptocurrency correlation. However, for further progress, it is imperative to secure BTC above the psychological mark of $20 thousand. 

cryptocurrencies high risk investment option

After the fall in May, the market was in shock; bitcoin traded in the range of $28-40 thousand. Those who hoped to see a lower price were not in the best position as they expected that bitcoin would cost $12 thousand. Now, we are witnessing a breakout of $27,000. This is due to the fact that optimism and the absence of a negative background. It is also worth noting the speech of the head of the Fed, Jerome Powell, who compared bitcoin with gold and expressed a positive trend in the development of this industry. Therefore, investing in cryptocurrency in the future can serve different purposes. 

Crypto Conclusion

In conclusion of this review, it is worth noting that recent events will be significant due to important events in the cryptocurrency market itself. In November, there will be a soft fork on the first crypto network that will trigger massive Taproot and Schnorr signature updates. The ETH network will continue to prepare for the Shanghai hard fork and the transition to Proof-of-Stake. With a high probability, the NFT and DeFi space will continue to seethe. Therefore, despite all the risks associated with investing in cryptocurrency, there are even more people who want to hit the jackpot and get rich on cryptocurrency in 2023.

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