Cryptocurrencies took the world by storm in 2017, with startling gains being seen across the board for the sector throughout the year. As 2017 came to a close, Bitcoin was nearing a peak of £13,000.
The mainstream public were learning about this seemingly new phenomenon that was turning people into millionaires overnight. This accelerated the rate of rising prices, as more people wanted to get a slice of the action. They were more interested in making money than in the underlying technology and its use as a currency.
While many expected this level of growth to continue, many experts in the world of finance called it a bubble and predicted it was only a matter of when, not if there would be a significant crash in prices. This duly came in 2018 when the cryptocurrency market as a whole saw its prices tumble.
Some will be of the belief that the gains are gone forever and that these cryptocurrencies have reached a level where they will remain for some time. Others believe that prices will converge over time towards zero.
However, there is still a lot of potential out there in the cryptocurrency market. Many smart people are now using this correction in the market to take advantage and make significant investments at discounted prices.
Here are 5 reasons why it’s not too late for you to invest in cryptocurrencies.
Regulation is on the way
One of the main drawbacks of the cryptocurrency market in its current form is the lack of proper regulation. While authorities across the world are busy at working developing a solid framework for these regulations, the likes of institutional investors are still wary about making significant investments into the space.
Until it becomes as well regulated as other financial markets, institutions will still be wary about putting too much money into cryptocurrencies.
One of the main problems is that because it is still such a new sector that governments do not really know how to properly regulate it. Unlike the buying and selling of equities which is regulated by the likes of the Securities and Exchange Commission (SEC) in the United States, there is no such regulatory body in the cryptocurrency world.
However, the authorities across the world are cracking down on errant tokens. There have been many high-profile prosecutions and lawsuits filed by the SEC against initial coin offerings (ICOs). A lot of them have been found to be in breach of securities laws and therefore are facing the consequences for their actions.
There is the concern that overregulation could stifle the sector somewhat, but it is a positive move to introduce a framework whereby consumers and institutions can be protected from dodgy practices.
Institutional money incoming
As the sector continues to be cleaned up and more regulations introduced, there will be a lot more institutional money coming into the space. The boom seen in 2017 was largely fuelled by everyday consumers investing in cryptocurrencies.
For the most part, financial instructions stayed away from purchasing cryptocurrencies. In 2018, this began to change. Many notable institutions made notable investments in the likes of ICOs. This investment sum is expected to expand rapidly in the coming years.
More cryptocurrency products being created
In the past, you had to own a cryptocurrency in order to trade it. This changed when Bitcoin futures were introduced in December 2017. It allowed people and institutions to make trades involving Bitcoin without having to own the asset itself.
There are now numerous cryptocurrencies which have futures contracts. There is also a sustained move to have cryptocurrency ETFs made legal. The variety of products gives the sector more credibility and allows investors to get more hands-on with their investing.
Blockchain technology adoption is exploding
The underlying technology that fuels cryptocurrencies is blockchain. Countless industries are embracing the technology to make their processes much more efficient and effective.
As adoption continues, more and more people will start to use tokens associated with these blockchain platforms. They will also understand much better how cryptocurrencies work, making them more likely to adopt and use them.
Upcoming financial crises
Over the past decade, the financial markets have been on an almost constant climb. It is one of the longest bull markets ever seen and this is now looking like ending. This means that investors will be looking alternative investments in which they can store their funds in this time of crisis.
Traditionally, people invested in the likes of gold. These days, a lot of people are seeing cryptocurrencies as being a potential store of value. Therefore, if this idea takes off, prices will inevitably soar once the market downturn strikes.
As you can see, there are many significant reasons as to why the future of cryptocurrencies is bright. If you are ever going to get involved in cryptocurrency investing, now is the time. Prices are rock bottom in comparison to where they were a year ago. The old adage about investing still holds true – “Buy low, sell high”.
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