Search
Close this search box.
Search
Close this search box.
Search
Close this search box.

Is it still worth investing in cryptocurrencies?

The swings in the value of cryptocurrencies that have occurred throughout this week have left investors concerned about price instability. Most of these assets have depreciated due to the plummeting of the FTT cryptocurrency, FTX brokerage token, whose prices have fallen by 80%. The drop was due to competitor Binance’s withdrawal to buy FTX, and contaminated other quotes.

Several cryptocurrencies have been affected by the FTT drop, such as bitcoin (BTC), whose prices fell 14% this week to their lowest level in two years. In addition, the elections in the United States have contributed to increased market volatility in recent days, in addition to putting pressure on U.S. interest rates.

“Higher interest rates generally mean less demand for assets with high risk-return ratios, including cryptocurrencies, so this rise may affect the market.” says KATE Capital CEO Vinicius Giglio. “We’ve already seen some decline in the cryptocurrency market in recent months, the question is what floor can they hit and consequently whether they are at an appropriate time to buy.”

So, in an attempt to hold off the threat of inflation in the United States, the interest rate increase should cool the cryptocurrency market overall. This downturn could put pressure on all assets, which should recover within months. This may represent a buying opportunity for long-term investors.

However, experts do not recommend specific coins like the FTX token, whose prices have fallen due to problems at the issuing companies and not as a result of rising interest rates. The fate of these coins is not yet known, and the risk is high.

Long Term
Despite the most recent swings involving cryptocurrencies in the short term, there is growing interest in making these assets a highly portable buy-and-hold style investment aimed at the medium to long term. Cássio Krupinsk, CEO of BlockBR, says that despite the declines, the cryptocurrency landscape is maturing and one of the reasons is the increasing regulation by the authorities.

There is a growing trend toward more and more central bank control over the circulation of cybercurrencies through the enhancement of blockchain technology. This is because, what gives the cryptocurrencies security criteria is the blockchain system, which are encrypted codes that work as passwords to prevent fraud and misappropriation within the cryptocurrency market.

More sophisticated blockchains along with the oversight of CBs could change the cryptocurrency landscape for more concrete investments. According to Krupinsk, “Central banks will have transactional control of what goes in and what comes out, I think that’s great. The decentralized universe will exist (…) So the market will self-regulate that way.”

Source: Forbes

share this content

You might like it too