The world of cryptocurrency presents a plethora of opportunities, but all investors must see the full picture.
Cryptocurrency has remained one of the biggest financial talking points during the early parts of the year, and that trend is set to continue throughout the rest of 2022.
Millions of investors around the world have already dipped their toes into the digital marketplace while millions more are currently in the stage of consideration. It’s certainly not hard to see the appeal either.
Modern tech is at the forefront of business right now, as was underlined by Apple’s recent $3 trillion valuation, while stories like Bitcoin’s peak of over $65,000 in 2021 or the rapid growth of various altcoins have grabbed global headlines.
However, as with any investment, there are potential risks. Most investors appreciate the volatile nature of digital currencies, but most people will see this as a potential opportunity rather than a trigger for increased exposure.
There are other issues to consider, like ‘what happens to my crypto wallet if I die?’ but the most concerning point to monitor right now relates to government regulations. They already exist in many countries and are coming in many more. There is no doubt that they have the potential to dramatically impact your future cryptocurrency investments.
Research in America shows that under one in three investors believe that government regulation will be a good thing for the price of Bitcoin. However, many experts have stated that regulations around the globe are inevitable.
5 Reasons Global Government Regulations Are Inevitable
Global cryptocurrency market capitalisation is over $2 trillion
Even in a slump, daily trading values are at over $1.7bn.
One in three businesses in the most developed countries now accepts crypto.
The industry has grown by nearly 900% since the pandemic.
70% of UK investors already (wrongly) think crypto markets are regulated worldwide.
In fact, famous voices like Jordan Belfort (Wolf of Wall Street) have stated that regulations are needed to combat problems caused by meme coins. Cryptocurrency has already become regulated in the U.S., European Union, and the United Kingdom. The pressure for all nations to follow suit has become palpable.
Regulations can be deemed important due to the protection they offer investors - from cybertheft as well as added transparency with their investments - but it should be noted that universal regulations could cause problems for investors too. For starters, some of the aforementioned altcoins and meme coins could be rendered valueless. For investors already holding those digital assets, their portfolios could take a major hit at any time.
Furthermore, as regulations become more commonplace and universally aligned, the price movements for Bitcoin, Ethereum, and other major cryptocurrency assets may be a lot slower. Given that the possibility of accelerated growth is one of the major attractions, it could have a major impact on how crypto investments are viewed, particularly by more casual investors. If trade volumes fall, that could potentially impact coin prices too.
Of course, regulations and legislation may also bring tax implications.
Does this mean regulation is the enemy? Absolutely not. Still, it should serve as a precautionary tale for new and experienced investors alike. Keeping an eye on the latest developments relating to government regulations around the globe - not just in your country - should allow you to keep making calculated decisions for impressive ROIs.
The cryptocurrency ship hasn’t sailed, but effective monitoring could be the key to determining whether you sink or swim.