What is Cryptocurrency Investment?
Cryptocurrency investment is the process of buying digital currencies and holding them, in the expectation that the market will move in your favour, resulting in an increase in the value of your portfolio.
The value of a cryptocurrency is determined by the principles of supply and demand. If demand for a digital currency increases, the circulating supply of that currency decreases, resulting in an increase in the price. Conversely, if the supply of the coin outpaces demand, it can lead to a decrease in price.
Investors may use a range of indicators to decide which cryptocurrencies to invest in, such as conducting technical analysis of a variety of coins. Some investors may have criteria they need to meet before investing, such as cryptocurrencies that are in an overall uptrend, have a durable, scalable blockchain interface, and are showing positive adoption signs.
Common Types of Crypto Investing
There are many ways to invest in cryptocurrencies, aside from directly purchasing coins or tokens through an exchange.
Popular forms of crypto investing include:
- Investing in crypto-oriented or pro-crypto companies — As the prices of cryptocurrencies soar, so does the stock price of companies that are built around them. Companies that successfully integrate cryptocurrency or blockchain networks into their services have the potential to be profitable as cryptocurrency use becomes more widespread.
- Investing in crypto-heavy funds — Crypto funds tend to carry less risk than investing in a single cryptocurrency. As some cryptocurrencies bull and some bear (decrease or increase), fund holders may still benefit from their losses being hedged by their gains, making them attractive to more risk-averse investors.
- Buying crypto EFTs on a brokerage platform — EFTs can be a great way to diversify a portfolio without committing large amounts of capital. The price of an EFT is determined by the price action of a group of coins or tokens, rather
