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The art of navigating the cryptocurrency landscape is about balancing risks and rewards

Published

7 months ago

24 June, 2024

The art of navigating the cryptocurrency landscape is about balancing risks and rewards

Disclosure: The views and opinions expressed herein are solely those of the author and do not represent the views and opinions of the crypto.news editorial.

At the beginning of 2024, financial markets were dynamic and full of opportunities and risks. Various factors fuel this dynamism, including technological advances, regulatory changes and global economic conditions.

As someone who has been working in this field since 2007, I have witnessed various economic cycles, crises and market fluctuations. The financial landscape of these two decades has been shaped by a series of significant events, such as the 2008 financial crisis, the European debt crisis and the recent global pandemic. These events underlined the cyclicality and intrinsic volatility of financial markets.

Today’s global economic landscape is also characterized by many uncertainties, with ongoing geopolitical tensions and fluctuating interest rates impacting market stability and forcing investors to adjust their portfolios in response to changes in monetary policies.

In this ever-changing environment, cryptocurrencies have emerged as a new asset class. Initially viewed with skepticism, they continued to attract a lot of attention over the years, however, as people saw them as an alternative to traditional financial instruments.

The cryptocurrency market has seen significant volatility through 2024 appearance of spot ETFs on Bitcoin in January made it easier for institutional and retail investors to gain exposure to cryptocurrencies. This regulatory green light has spurred significant capital inflows into the market.

Consequentially, The price of BTC it continued to break previous limits and set a new all-time high above $73,000 in March. This surge clearly illustrates how regulatory changes can create profitable opportunities in emerging asset classes.

However, for all the allure of the potential gains, I believe it is crucial to recognize that the cyclical nature of markets applies to the world of cryptocurrencies as much as it does to traditional finance. A great example of this is the fact that the aforementioned Bitcoin rally was further fueled by the anticipation of the halving event occurred in April. Bitcoin halvings are a well-known cyclical event that typically leads to increased market activity and price appreciation.

Recognizing such patterns can help investors make informed decisions and better manage expectations regarding both potential risks and returns. And this is precisely what I want to bring attention to in this article.

In the cryptocurrency market, the uncontrolled desire for profit can often lead to problems when people indulge in impulsive decisions and follow the hype. The fear of “missing out on something good” and the promise of getting rich quick can easily lead to significant losses. This is especially true when they invest their money without fully understanding the underlying technology of cryptocurrencies or the dynamics of this market.

The inherently volatile nature of cryptocurrencies only serves to exacerbate this problem. Investing in volatile assets without thorough market analysis can be similar to gambling. As a general rule, the higher the promised income, the higher the risk. It is critical that investors understand this and exercise caution when making any investment decisions.

Ideally, you should diversify your portfolio and allocate only a portion of your assets to high-risk investment opportunities. Don’t put all your eggs in one basket. By balancing risk exposure, investors can better withstand market fluctuations and minimize potential losses.

Taking this advice one step further, it is generally best to only invest money that you can afford to lose. This approach allows investors to take calculated risks without jeopardizing their financial well-being. It can also help mitigate emotional stress resulting from trading and investing activities.

Another important thing to keep in mind is that the cryptocurrency market is full of scams and fraudulent schemes. According to the US FBI dataNearly $4 billion was lost to cryptocurrency investment fraud in 2023. From Ponzi schemes to phishing scams, investors must remain vigilant and never take shortcuts when navigating this landscape. Engaging in due diligence and verifying the legitimacy of all investment opportunities can help mitigate the risk of falling victim to bad actors in the industry.

Furthermore, in the context of evolving market dynamics, it is essential that investors remain informed about regulatory developments in the cryptocurrency industry. Giant strides have been made in the field of cryptocurrency regulation over the past seven years, marking a notable evolution in how digital assets are perceived and the role they play within the broader financial landscape. The growing interest of large companies in this sector highlights the growing legitimacy and potential of cryptocurrencies as integral components of the modern economy.

As governments around the world grapple with the regulation of digital assets and their integration into traditional financial systems, changes in rules can have a significant impact on market sentiment and investment strategies. Investors need to keep track of these developments and adapt accordingly if they don’t want to be left in the dust.

In conclusion, investing in cryptocurrencies can be rewarding, but it comes with its share of risks. As the saying goes: “The only free cheese is in the mousetrap.” While the siren call about potential gains is understandable, investors need to approach the market with caution. The pursuit of profit must be balanced with prudent risk management strategies and adequate research. Otherwise they risk becoming the unfortunate mouse.

Valentina Drofa

Valentina Drofa is a financial market consultant. She is an international entrepreneur and business leader with over 15 years working with financial companies. Valentina has a PhD in Economics and is the author of numerous books on financial literacy.

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How Ether Spot ETF Approval Could Impact Crypto Prices: CNBC Crypto World

Published

7 months ago

3 July, 2024

AltcoinUpdates Staff

How Ether Spot ETF Approval Could Impact Crypto Prices: CNBC Crypto World

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CNBC Crypto World features the latest news and daily trading updates from the digital currency markets and gives viewers a glimpse of what’s to come with high-profile interviews, explainers and unique stories from the ever-changing cryptocurrency industry. On today’s show, Ledn Chief Investment Officer John Glover weighs in on what’s driving cryptocurrency prices right now and how the potential approval of spot ether ETFs could impact markets.

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Miners’ ‘Capitulation’ Signals Bitcoin Price May Have Bottomed Out: CryptoQuant

Published

7 months ago

3 July, 2024

AltcoinUpdates Staff

Miners' 'Capitulation' Signals Bitcoin Price May Have Bottomed Out: CryptoQuant

According to CryptoQuant, blockchain data shows signs that the Bitcoin mining industry is “capitulating,” a likely precursor to Bitcoin hitting a local price bottom before reaching new highs.

CryptoQuant analyzed metrics for miners, who are responsible for securing the Bitcoin network in exchange for newly minted BTC. As outlined in the market intelligence platform’s Wednesday report, multiple signs of capitulation have emerged over the past month, during which Bitcoin’s price has fallen 13% from $68,791 to $59,603.

One such sign includes a significant drop in Bitcoin’s hash rate, the total computing power that backs Bitcoin. After hitting a record high of 623 exashashes per second (EH/s) on April 27, the hash rate has fallen 7.7% to 576 EH/s, its lowest level in four months.

“Historically, extreme hash rate drawdowns have been associated with price bottoms,” CryptoQuant wrote. In particular, the 7.7% drawdown is reminiscent of an equivalent hash rate drawdown in December 2022, when Bitcoin’s price bottomed at $16,000 before rallying over 300% over the next 15 months.

This latest hash rate drop follows Bitcoin’s fourth cyclical “halving” event in April, which cut the number of coins paid out to miners in half. According to CryptoQuant’s Miner Profit/Loss Sustainability Indicator, this has left miners “mostly extremely underpaid” since April 20, forcing many to shut down mining machines that have now become unprofitable.

CrypotoQuant said that miners faced a 63% drop in daily revenue after the halving, when both Bitcoin block rewards and transaction fee revenues were much higher.

During this time, Bitcoin miners were seen moving coins from their on-chain wallets at a faster rate than usual, indicating that they may be selling their BTC reserves“Daily miner outflows reached their highest volume since May 21,” the company wrote.

Among the sales of Bitcoin miners, whales and national governmentsBitcoin’s price drop in June also hurt Bitcoin’s “hash price,” a metric of Bitcoin Miner Profitability per unit of computing power.

“Average mining revenue per hash (hash price) continues to hover near all-time lows,” CryptoQuant wrote. “Hashprice stands at $0.049 per EH/s, just above the all-time low hashprice of $0.045 reached on May 1st.”

By Ryan-Ozawa.

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US Congressman French Hill Doubles Down on Trump’s Pro-Crypto Stance

Published

7 months ago

3 July, 2024

AltcoinUpdates Staff

US Congressman French Hill Doubles Down on Trump's Pro-Crypto Stance

US lawmaker French Hill has noted that Donald Trump will take a more pro-crypto approach than the current administration. The run-up to the presidential election has seen cryptocurrencies become an issue with lawmakers making huge statements ahead of the polls. Donald Trump has also been reaching out to the industry, making a pro-crypto case.

French Hill Backs Trump’s Pro-Crypto Stance

Republican Congressman French Hill has explained the type of cryptocurrency regulatory framework he believes Donald Trump could adopt in the country. In a recent interview with CNBC, French Hill said that the recently passed FIT21 bill is the type of regulatory framework the Trump administration will adopt in the sector.

#FIT21 passed the House with 71 Democratic votes, it’s exactly the kind of digital asset regulatory framework former President Trump would support if re-elected.

See more on @SquawkCNBC🔽 photo.twitter.com/ceTmU4LApU

— French Hill (@RepFrenchHill) July 3, 2024

THE FIT21 Bill It is intended to protect investors and consumers in the market by establishing clear rules and powers for the various regulators in the sector. According to Hill, Trump will adopt it because it directs the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) on the specific regulatory framework needed in the market.

“… for people who are innovating and starting a crypto token, a related business, custody of those assets, how to ensure consumer protection, so I think that framework is the right approach and that’s what I’m going to recommend to the President to pass, which is that we have not passed it between now and the end of this Congress.”

He also called Trump an innovative and pro-growth president in financial matters.

Cryptocurrency is going mainstream

This election cycle saw the cryptocurrency industry taking a place in mainstream issues following broader adoption across demographics. From candidates moving toward enthusiasts to recent pro-Congress legislation, cryptocurrencies have become a rallying point for officials. The U.S. regulatory landscape has been criticized for stifling growth due to frequent SEC LawsuitsThis has led executives to push for pro-cryptocurrency laws and raise money for pro-industry candidates.

David Pokima

David is a financial news contributor with 4 years of experience in Blockchain and cryptocurrency. He is interested in learning about emerging technologies and has an eye for breaking news. Keeping up to date with trends, David has written in several niches including regulation, partnerships, cryptocurrency, stocks, NFTs, etc. Away from the financial markets, David enjoys cycling and horseback riding.

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US Court Orders Sam Ikkurty to Pay $84 Million for Cryptocurrency Ponzi Scheme

Published

7 months ago

3 July, 2024

AltcoinUpdates Staff

U.S. Court orders Sam Ikkurty to pay $84M for crypto Ponzi scheme

A federal court has ordered Jafia LLC and its owner, Sam Ikkurty, to pay nearly $84 million to cryptocurrency investors after ruling that the company was operating a Ponzi scheme.

The ruling, issued by Judge Mary Rowland in the U.S. District Court for the Northern District of Illinois, follows a lawsuit filed by the Commodity Futures Trading Commission (CFTC) in 2022 after the fund collapsed.

Judge Rowland found that Ikkurty, based in Portland, Oregon, did numerous false claims on his company’s hedge funds.

These included misleading statements about his trading experience and the promise of high and stable profits. Instead, Ikkurty used funds from new investors to pay off previous investors, a hallmark of a Ponzi scheme.

The Ponzi Scheme

The court found that Ikkurty misappropriated investment funds for personal use without the knowledge of the investors. These funds were used for personal use and were reported as Fraudulent Investmentscausing significant financial losses to customers.

This non-transparent operation violated Transparency Commission regulations, which led to the imposition of a hefty fine to compensate defrauded investors and restore some public confidence in the financial system.

Judge Rowland emphasized that fraudulent activity such as this violates the law and undermines the integrity of modern financial markets. The $84 million award seeks to address the financial harm inflicted on investors and reinforce the importance of legal compliance in cryptocurrency trading.

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