The digital currency marketplace is quite unpredictable and it is not necessary that whatever forecasts worked in 2019 would necessarily work in 2020. It was during the spring rally that predictions were made about the value of bitcoin. According to forecasts, bitcoin was supposed to drop, but it did not. The value of bitcoin increased and it appeared that the forecasts were incorrect.
In fact, this is not the first time predictions about bitcoins value had been incorrect. Many expert analysts have reported that the trend does not necessarily follow according to their predictions.
So it is quite true that while the bitcoin industry is lucrative, it is highly unpredictable. Both new and old investors have their concerns when it comes to making investments in this field.
In this post, we will look at some of the main fears of crypto investors. If you are interested in becoming a part of this field, this post will highlight some of the main fears that these investors face on a daily basis. Let’s take a look.
1. Digital currencies are speculative
Bitcoin has a very large market capitalization. Its current market cap is approximately $200 billion. But, despite this fact, the market is extremely liquid.
Investors must know that the current turnover does not involve the entire $200 billion. Another thing is that the amount is also shared among crypto exchanges which are further shared among various pairs.
If we take a look at the trading volume on a daily basis, it certainly does not cross the $1 billion mark. The markets can easily get manipulated because the trading volume which bitcoin accounts for in exchanges is far less than their overall trading volume.
2. Regulatory aspect
Not all countries in which bitcoin is operational have a proper legal structure in place. There are only few countries including Australia, Canada which have implemented some kind of rules and regulations related to the buying and selling of bitcoins. But the problem is that the constant change in rules and regulations deters many investors from actively making investments in digital currencies.
3. Technical difficulties
Out of the thousands of investors surveyed, one of their main fears was technical failures. It is true that crypto exchanges are not highly advanced which makes their systems susceptible to technical malfunctions. Sometimes, there could be delays in processing orders. Other times there could be security threats preventing trading from investing large sums of money.
A large number of investors say that they are not confident about making investments in bitcoins because exchanges do not offer adequate transparency, security, safety and speed.
There has been occasions when exchanges were convicted of leaking their clients’ personal information and data. Exchanges are required to implement a certain degree of reliability when it comes to storing their clients’ personal information. But, privacy issues keep arising, causing investors to have doubts and insecurities.
5. Market going down
It is also possible that bitcoin can lose its value to the extent that it can bring down the market. Although it is not a common scenario, but it is definitely something that investors worry about and have fear of.
6. Lack of quality instruments
Cryptocurrency exchanges do not cater to the needs of stock traders and fiat currency traders. These markets on their own are very popular and traders who have been a part of the stock and foreign exchange market will not abandon them to join the crypto market which is already highly liquid, speculative and unpredictable.
The fears of crypto investors may not vanish completely as each of these issues and problems are solved or if the quality of service exchanges offer become better. But, there is no doubt that the crypto market is lucrative and still going very strong.