Cryptocurrency Traders: Pioneers or Risk-Seekers
Whether cryptocurrency traders are pioneers or merely risk seekers is frequently asked by people who are not into cryptocurrency trading. You can start earning bitcoin for a smoother trading experience with the best trading techniques. To answer this question, we will look at how cryptocurrency traders compare to other investors based on factors such as age, gender, and the amount of risk they are willing to take.
First, let’s get a breakdown of the demographics involved. Compared to other types of investors (e.g., buy-and-hold mutual fund investors), cryptocurrency traders tend to be younger and more prone to take higher levels of risk, according to data collected by Bloomberg.
Cryptocurrency investors are relatively young: 50% are under 35, whereas only a third of mutual fund investors fall into this category. Many cryptocurrency investors (48%) also indicate a willingness to take on greater levels of risk in their investment portfolio than the typical mutual fund investor (21%).
Second, let’s examine how cryptocurrency traders compare to other investors when deciding which stocks or bonds to invest in. In addition to searching for potential returns, many brokerage firms have made efforts over recent years toward providing guidance and investment advice based on a particular set of rules or criteria that make sense in light of market fundamentals and an investor’s current risk profile.
Research shows that cryptocurrency traders have a relatively high degree of interest in investing in companies emphasizing blockchain technology and cryptocurrencies. Here is a detailed overview of whether cryptocurrency traders are pioneers or merely risk seekers.
Overall Returns on Cryptocurrencies:
The overall returns that cryptocurrency investors have seen since 2016 are pretty impressive compared to the returns that other investments have seen in the same period. While hedge funds and mutual funds have seen average annualized returns of 6% and 1.9%, respectively, Bitcoin has returned an average of 312% per year over this same period (as of February 2018).
In addition, ICOs (initial coin offerings) — which involve the sale of new cryptocurrency tokens often based on the Ethereum ERC20 standard — have also gotten off to a strong start with a compounded average return of 86,500% (as of February 2018).
Risk Tolerance in Cryptocurrency Trading:
There is a perception that cryptocurrency traders tend to take more significant risks than other investors. While it’s true that the average cryptocurrency trader has a high degree of interest in investing in companies that emphasize blockchain technology as well as cryptocurrencies, examining more carefully the data shows that cryptocurrency traders not only invest in asset classes like stocks and bonds but also have a high level of interest in investing in startups and other early-stage technology companies.
Diverse Portfolio:
The idea behind diversifying is to spread risk across different investments to limit downside exposure and increase potential returns. Unfortunately, when it comes to cryptocurrency, the range of investors and types of investment possible is vast.
Some of the more popular cryptocurrencies traded on cryptocurrency exchanges and have reached a market capitalization (number of coins multiplied by nominal value) of over $1 trillion are Bitcoin and Ethereum. In contrast, coins like XRP and Litecoin have recently halted the $30 billion mark. Although Bitcoin currently has a value which makes it the largest asset class in terms of market cap, and there is no doubt about its dominance in the market, this does not eliminate other forms of cryptocurrency.
Why should you participate in cryptocurrency trading?
With the development of a broader range of technologies and more comfortable access to cryptocurrencies, the world has seen a massive increase in the number of people using digital currencies.
Cryptocurrencies, in general, can be used to conduct transactions between two parties anywhere in the world without a financial intermediary. Using digital currency (also known as cryptocurrency) for transactions is one way of avoiding money transmission regulations and fees associated with traditional money transfer services.
It is also one of the few ways you can generate passive income. Regarding cryptocurrency, many trading options are available depending on your investment goals, risk tolerance and financial situation. Trading strategies followed up by automated trading can lead to a robust income from this progression.
In addition to investing in a diverse portfolio of various assets, cryptocurrency investors are often early adopters of new technology. It makes cryptocurrency trading a low-risk way to invest in the new internet economy and explore opportunities created by the associated blockchain technologies that make it possible.
Cryptocurrency traders are now becoming more and more mainstream with each passing day. However, certain companies help you use your investing skills by offering you something similar to brokers but with fewer or no fees.
