When crypto hits the news, it tends to be because of something of significance. In November 2021, the news surrounding bitcoin was extremely positive for anyone who had previously made investments in this particular cryptocurrency. Back then, bitcoin surged and happy investors saw their chosen crypto reach $60,741.
However, the volatility of crypto was shown not long after and 2022 has not been kind to investors. By September of this year, bitcoin was just over $19,000. A brutal drop that is showing little signs of reversing to the heady times of last year.
Does this mean that crypto is a bad investment in 2022? Or, should you still consider speculating in bitcoin, or another currency?
How risky is crypto as an investment in 2022?
Crypto is seen by many as too volatile for trading and investing in. Yet, many businesses are investing in bitcoin, notably Tesla. In January, it was announced that Tesla had invested $1.5 billion in bitcoin, with a view to the company allowing consumers to purchase vehicles with it.
This change of strategies is being seen in many global businesses now as crypto becomes more normalized, and is accepted in ecommerce and by services online. Instead of expecting a short-term profit, crypto is being seen by many as a longer-term strategy now.
However, Tesla retreated from this position fairly quickly. By halfway through 2022, the company had sold around 75% of its bitcoin as it looked to improve its cash position. This was blamed on the impact of Covid restrictions in China and was not linked to the current state of bitcoin according to one spokesperson.
To look at how risky crypto may be, you might want to consider the losses made. In just May and June, $1 trillion was estimated to have been wiped from all cryptocurrencies. There are signs that you need to close a trade, and it might be that software can lower the risk with crypto.
Can auto trading software lower your risk factor?
The volatility of crypto has made it exciting for some investors when they have seen huge surges in the price of their chosen currency, but it is also the reason why many still shy away.
Many traders today employ software or bots to make automatic trades. While plenty of traders wish to make manual transactions and close out their own deals, many others prefer to use apps that can make profitable trading decisions in real time with no human interaction.
There are a number of platforms including Bitcoin 360 Ai which uses technology to identify trading possibilities and trends. Advanced algorithms are used by these platforms to continually monitor the crypto markets, and analyse data. When rules and permissions have been set by you, the investor, the software can be permitted to make trades automatically.
This gives you a more accurate and less risky way to trade in crypto, in what has been a difficult year so far.
Is crypto in a bear market now?
Bitcoin lost 58% of its value in 2022, and for some, this is a good sign. Many investors are sensing that it will take a long time for crypto to recover, but if you are looking for a long-term investment then the potential for huge growth is still there.
Yet, many traders are looking for a quicker return on their investments. The term bear market refers to prolonged price decreases in any market. The last time a bear market occurred for cryptocurrencies was around 5 years ago. Between 2017 and 2018, cryptocurrencies had a similar time as they have over the last 12 months. Firstly, crypto rose sharply in value during 2017, then in 2018, the value of bitcoin and other currencies slumped.
This bear market has had other factors to complicate matters. Inflation has risen dramatically, and many investors have overborrowed. Current US inflation rates are still high and causing problems with debts, and financing. In July the Irish inflation rate was 9.1%. The stablecoin Terra USD is trading somewhere around 98% below its all-time high value, and several crypto exchanges have collapsed.
This has all helped to form the current bear market for crypto. Traders are still making profits with bitcoin and Ethereum however, But, if you choose the route of auto trading, are you on the right side of the law?
Is it legal to use auto trading solutions and bots?
It seems that the boom time for crypto has gone as the market collapses, and billions are wiped from the values of the big currencies. Yet, many traders are turning to technology to reduce the risk of bitcoin’s volatility, and to make instant trading decisions automatically.
Being able to use software to automatically scan markets and identify profitable trades gives a huge advantage over anyone who is trading manually. Trading bots and automated trading platforms are perfectly legal, but there are some factors to consider.
When choosing a trading bot or automated software, you should look to see how accurate it is, and whether it can be used with your crypto broker. It is also worth checking if there are any minimum investments.
Crypto bots are not the same as automated trading platforms. A crypto trading bot will make decisions for you through a broker, and many brokers prohibit their use.
Signing up for an automated trading platform is different. From here you can deposit funds, set your rules for trading, and then let everything happen automatically. The best auto trading platforms are over 99% accurate. They are legal and secure, and the best ones will be accredited too.
How are the various cryptocurrencies looking now?
The current cryptocurrency values at the time of writing, bitcoin was trading at over $19,300, and Ethereum at over $1,600. There is a lot of talk surrounding the regulation of cryptocurrencies, and this would certainly reduce some of the risks to investors.
Terra USD lost $60 billion from its valuation in just a few days. Many regular people lost small fortunes including their life savings from this sudden crash. Worse still, many of these investors tried to withdraw their money or sell their currencies only to find they weren’t able to.
One such crypto platform, Celsius, froze customers’ accounts and refused to allow any withdrawals, as it became clear how big its mounting debt problems were becoming. It has since been made clear in court documents that the company owed around $4.7 billion to its user base.
As cryptocurrencies continue to remain downbeat compared to their record highs of last year, many experts are predicting huge future growth.
Will crypto ever recover from this bear market?
Trades can still be made with crypto, and there are some ways to mitigate the risks involved. But if it is long-term rewards that you are looking for, then there may be good news.
One panel of 50 crypto experts has agreed that the current market will not only recover but will thrive better than ever. The commodity strategists for Bloomberg have publicly stated their belief that by 2025, bitcoin could be worth $100,000.
Trading in stocks, fiat currencies, or crypto, will also present some form of risk. Crypto trading is particularly risky due to the volatility, and unregulated nature of these currencies.
However, through the use of smart platforms that use algorithms to monitor and analyse markets, you could reduce the risks involved. Alternatively, if you agree with many of the crypto experts today, it may be best to look at a longer-term investment for larger growth.