For most of us, we focus on earning money and saving it. If you want to grow your wealth, you need to make the right investments. Many investors are turning to digital assets, such as cryptocurrency.
Though there are different investment avenues to pursue, no one should count out crypto just yet. However, you shouldn’t invest all that you have in it. Diversification is essential, which can include stocks, real estate, and bonds.
However, if you are focused on new options and want to take calculated risks, a digital asset is the best way to go. Those who still aren’t sure may want to consider why many investors are choosing to work with digital assets now:
- Significant Returns and Liquidity
The digital asset industry is still new, so many high-volume institutions haven’t invested yet. That means you are going to see more liquidity and volume from the digital asset market. Though many exchanges see $150 million a day, that’s still nothing compared to how much Bitcoin (crypto) is out there.
Since there’s so much volume, there’s also more liquidity and less price volatility. Investors are just now realizing that, so they are investing to see significant returns.
- More Control over the Investment
With most investments, you’re at the mercy of the economy and market. Most people feel like they have no control. However, with digital assets, you are in full control. You’re allowed to leave it alone and let it ride or sell it.
Though you can do that with almost every stock and asset out there, crypto-assets work a bit differently. They’re often short-term trades, so you aren’t holding them for weeks or years. That gives you more control over when to sell. While it also means more analysis of the markets for you, it’s a great way to know what’s going on, set it up for cruise control (with the right strategy), and ride it out.
- More Flexibility
Most investors dislike having to call their broker or go in to speak to someone whenever they want to make changes. With digital assets, everything is done online. That means you can be trading at 2 a.m. and checking your portfolio at midnight. You’re not waiting for the stock market to “open,” and there’s more flexibility.
If you work outside the home, you can still use your lunch break or after-work hours to make trades and analyze the market. That means you can be earning a passive income once you have your strategies in place and they’re tested for quality.
- Regulation Knocking at the Door
The regular digital asset market is full of uncertainty when it comes to regulation. Governments all over the world want to regulate it to protect consumers, but they aren’t sure how to classify those assets yet. That means there are many gray areas.
However, when you work with digital asset derivatives, there is more regulation. Still, that’s not all there is for the market.
Many people wish that the SEC and FINRA were involved so that trading securities with good protection was a possibility. Though it hasn’t happened yet, it’s set to because INX is paving the way.
When INX goes live with its launch, you’re going to have a secure platform that offers protection against fraud. While it’s still going to be private and blockchain-based, there are more rules for everyone to follow. Though that can seem a little off-putting at first, it’s a great thing! In fact, there’s going to be less cybercrime, and mishaps are going to be fewer and far between.
That isn’t to say that the system is going to be perfect because nothing is. People can still steal money from banks, but it’s so much harder to do now than in the past.
- More Leverage and “Shorting” Capabilities
When trading digital assets, you don’t have to own them until the contract is settled. Sometimes, you don’t hold it after settling, either. Since you’re not worried about the custody or acquisition of the investment, it opens up more efficiency and trading types.
For example, you can trade on leverage or take a short position on the assets you think are going to fail. With a standard exchange, you can only sell and buy.
When you include digital assets and their derivatives in your portfolio, you’re smoothing out the price swings within the industry. Plus, most derivatives don’t require you to own them before you bet against them.
Those who want to buy and sell cryptocurrency are also going to farewell. Most investors choose digital assets because there are so many of them available. The goal is always to be safe and protected, which is why INX has taken the lead to become regulated.
- Easier to Hedge Your Portfolio
Since you can trade with shorts and leverage, digital assets are great at hedging risk exposure from other investments.
Let’s assume right now that Bitcoin is in your portfolio. Instead of selling during peak times, you can take short positions on a futures contract. That means you have some protection from risk if the market sees a downturn, and you don’t have to sell the investment outright.
With that, you can also leverage a particular asset to risk more for a particular investment. This is riskier, but it is a great strategy that many investors are starting to use.
- New Assets
New digital assets are popping up all the time. While you have to research them to see if they are likely to fail or not, this does give you many opportunities to invest. More and more investors choose the newer ones and even buy initial coin offerings on them. That way, they get the coins for a lower price and can sell them when a buzz is generated.
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