Michael Kamerman, CEO of Skilling explains why crypto is here to stay.
On the one hand, the continuing emergence of new cryptocurrencies presents a new way for traders to manage their finances, but on the other, crypto is perceived as a “get rich scheme” influenced by endorsements from celebrities and social media. The Bank of England is pushing to regulate crypto, arguing its volatility poses an existential threat to the global financial system, which is problematic for those who know of its potential and see its drive within the younger generation. Today’s retail traders must apply emotional intelligence and carry out thorough research in their crypto trading if they wish to reap long-term rewards from its growth.
Crypto’s misguided reputation
For those not yet involved in crypto trading, the crypto world may seem slightly daunting to begin putting their hard-earned money into. Its current volatility is sometimes directly driven by notable influencers online such as Elon Musk who recently, upon simply sharing a picture of his dog on social media, dramatically raised the value of the Shiba Inu coin - which is now the world’s 11th largest crypto. Social media influence from magnates directly causing the rise and fall of crypto assets has also been seen with other popular cryptos such as Dogecoin, emphasising the importance of applying emotional intelligence when trading.
It doesn’t help that many brokers have taken advantage of the current crypto zeitgeist to create novel crypto coins and tokens – leading traders to unwittingly embark on “pump and dump” schemes. Taking advantage of novice traders by promising to multiply their investment, only to then pull the rug out from underneath them, has also unfairly tarnished crypto’s reputation, epitomised by the recent Squid Game tokens scandal.
However, instability is to be expected with a decentralised asset such as crypto. The fact that it is not issued, regulated, or backed by a central authority cannot be foolishly overlooked. Whilst this can be attractive to novice and younger traders in particular, traders must be mindful of what exactly they are putting their money into by conducting extensive research and not allowing themselves to become emotionally influenced by any social media hype. Crypto can prove to be an incredibly successful financial investment if traders aren’t foolish. After all, you wouldn’t invest in a property without carrying out your due diligence beforehand, nor would you invest in it simply because a celebrity promoted it, so why would you when it comes to crypto investment?
Emotional intelligence and crypto
With a social media post about crypto being uploaded every 2 seconds on the internet, fluctuations in a crypto coin or token’s value are often driven by the over-excitement or fear that comes with it. Fear of missing out on a profit or losing money may cause traders to make a regrettable decision with their trading, resulting in “bad plays” as the value of the coin dramatically changes, for seemingly no reason, sometimes in the space of a few hours.
To mitigate risks, traders need to make sure they are emotionally rational with their investment decisions. Constantly looking at the price of a coin in fear of losing money or missing out on a gain, can do more harm than good, leading to reckless, unwise decisions being made. Instead, being thorough in prior research of a crypto and trusting in its value will help make sure a social media post from a particular celebrity doesn’t cause traders to panic.
A young person’s game
Traditionally, consumers looking to diversify their financial portfolio would likely consider investing in stocks and bonds as a “safe” way of ensuring long term financial gain. Today’s older generations, who started their investing journey decades earlier, are now reaping the benefits and are less concerned with making money in the short-term in a way that might be risky.
For today’s younger, more adventurous and risk-taking traders, stocks and bonds are too slow a way of making money. With many having the luxury of more time on their hands, they can afford to take bigger risks with their investments to multiply their money faster than traditional forms of investments. Crypto is the perfect asset for them to champion, with certain tokens having incredibly innovative business models and using technology in ways that will likely continue to shake up the industry in the coming years.
Nevertheless, with investing in something as exciting yet volatile as crypto, retail traders need to keep a level head to ride through the inevitable peaks and troughs. Prospective traders should make sure to assess crypto investments as they would any other investment, as being too emotionally vested in the initial outcome may end up hurting their capital, leaving them disillusioned and dissatisfied.
Ultimately, crypto is like any other asset in the market - its value is driven by investors who bump and lower the price. What is fundamentally different, however, is the severity and speed by which its value can change. In such a volatile space, it is crucial that investors are considered, thorough, and apply significant emotional intelligence if they wish to successfully cash in on crypto investment.
This article does not constitute investment advice. 66% of retail CFD accounts lose money. Trading cryptocurrency is not available for UK retail clients.
But, on the other hand, the coins can also collapse again very quickly. So it's important to take a good look at how things are going. This is the only way you can keep a close eye on the trends. Here you will find some tips that you can easily use when investing.
The rate of the coins
Of course, it all starts with the basics. It is always the case that the price of the coins is the starting point. So that means it helps you to find websites with the most accurate information on this. A good example is websites on crypto. These are the kind of websites where you can very simply get started with the rates of the various coins. Where you can also look at the trends and expectations. Only in this way can you make the best possible choices. That is ultimately the basis of success.
Staying on top of the news
When you decide to invest in crypto coins, you can also anticipate the trends and expectations. After all, these come from somewhere. This is actually no different from other types of investments. This is because of the news and current events. This means, therefore, that it is smart to look at what is out there to follow this. More and more news is very easy to get. Especially since this market has become so big. So you can take advantage of that when you invest.
Focus on the many coins
It is also fun to focus on the different types of coins. After all, there are a lot of them, including Bitcoin, Ripple XRP, Dogecoin, Ethereum.
It is good to know what the differences are and why one does better than the other. The best place to start is with real specialists. This website, for example, is the place to go. That's the kind of provider where you can get all the information very easily. This way you can be sure that you really make the right choice when you bet. It's exactly what you need for this.
Getting in quickly when there are opportunities
Then finally, there is one more point to consider. The world of cryptocurrencies does change very quickly. So you do need to see your opportunities in it. By getting in and out on time you seize the opportunities on the market. That is the way to ensure that you actually earn something from the coins. Many people have already been successful with this. For that reason alone it is advisable to find good sources and consult them regularly to be sure.
According to reports, Jordan Belfort, the American stockbroker immortalized in the blockbuster movie Wolf of Wall Street, claims Initial Coin Offerings, the IPOs for new crypto coins, have become “the biggest scam ever.”
Belfort told the Financial Times that fundraising ICOs are “far worse than anything I was ever doing,” adding that “"It's the biggest scam ever, such a huge, gigantic scam that's going to blow up in so many people's faces.”
Many see crypto currencies as a massive investment in the future of finance, while other see them as a bubble, with rising prices inciting a speculative investment spin. According to official figures from CB Insights, $2 Billion was raised in ICOs in the first nine months of 2017 alone. In 2016 the same period saw $54 Million raised. Bitcoin, the leading crypto currency has also seen a rise from circa $1,000 to up to $5,000 this year.
Cryptocurrency expert and Founder of London firm CommerceBlock disagrees and says the old guard of banking and finance are running scared. Nicholas Gregory, founder and CEO of cryptocurrency enabler CommerceBlock, said: "The old guard are being cut out by ICOs which means the banks, VCs and lawyers are losing billions. No wonder they're upset.
"It's wrong to ban them because an ICO is just a way of crowdfunding investment for technology firms who choose to do it in cryptocurrency because that is their field.
"In the old days - up to a year ago - you would go to a VC and they would decide whether to invest in your company and you would have to follow their rules. ICOs make it easier for companies to raise funds from more sources and free themselves from the straitjacket of VC interference.
"Are there scams? Of course. But there are scams in every financial system from penny stocks to fraudulent gambling sites.
"It's too easy for critics to point the finger of blame at the technology and not the criminals who exploit every loophole in every kind of commercial environment.
"Investors take a risk by buying into ICOs just as they do buying equities, even though they are not securities. But they are offered far greater transparency. There is more they can vet with ICOs because you can look at the source code of the firm you are funding. You can download the product and play with it. In the stock market all you get is a brochure.
"This is why it's more transparent and that's why VCs hate it. The VC model is all about the 1%. Only a multi-millionaire could invest in Facebook in 2009. With the ICO model, if you and I spot the next Facebook we can get in on it."
