The siren call of crypto trading: What makes digital assets such an appealing option for investors?

(Sponsored) Crypto went from a frowned upon asset class, harshly criticized for its volatility and association with illicit activities, to being one of the hottest investments in the market in what seems like a blink of an eye.

The figures don’t lie: with over 560 million crypto owners worldwide and about 50 million active crypto traders, according to some platforms, it’s pretty obvious that cryptocurrencies have become an increasingly popular option for investors.

Only a decade ago, people were hesitant and fearful of investing in digital assets because they represented an unusual and uncharted territory, so not many dared to venture into the crypto space and put their money on the line.

Nowadays, crypto is no longer a fringe innovation and trading cryptocurrency pairs like ETH/BTC is a common activity practiced by a growing number of individuals from all over the world.

There are several key factors that prompted this evolution and caused crypto trading to surge in popularity in recent years, and we’re going to explore them all in what follows.

Potential for high earnings

Crypto is know as a high risk, high reward investment due to the while price swings that are common in the market. So, what drew people to crypto in the first place was the possibility of earning high profits in a relatively short period. If you invest in a crypto asset at the right time, you could achieve returns of 100X or more.

However, instances of people getting rich by investing in crypto are rare and becoming rarer as the market matures and becomes more competitive. Besides, one should not forget about the high-risk part.

While you might be able to take advantage of market volatility to unlock investment opportunities and boost your earnings, price fluctuations are just as likely to work against you and cause you to lose money, so crypto investing is a double-edged sword from this perspective.

Accessibility

Back in the day, one had to put in quite a bit of effort to break into crypto. The lack of awareness and information regarding digital currencies and the complicated process that people had to go through to acquire crypto and navigate the market posed major barriers to entry. Therefore, trading crypto was rather demanding and required good technical knowledge.

Things have changed a lot in the meantime, and it’s now easier than ever to build a crypto holding and start trading, even without any technical expertise or market experience – although it’s obviously wiser to do your due diligence and prepare thoroughly before you start.

Gaining exposure to crypto can be done through a variety of methods, from mining (less popular and profitable due to the resource-intensive process) to buying crypto assets directly on an exchange platform, investing in crypto ETFs or purchasing stocks in crypto companies.

Non-stop availability

Unlike traditional markets that have a fixed schedule, allowing trading during standard working hours, the crypto market never sleeps, being open 24/7. This gives investors from all parts of the world the possibility to place their trades whenever it’s convenient for them.

Without scheduling constraints, traders can react quickly to shifting conditions and take advantage of fluctuations, instead of waiting for the market to open to make a move. Also, the freedom and accessibility that the crypto market provides are something that many people appreciate, as it aligns with their dynamic lifestyles.

Increased legitimacy

People used to be wary of including crypto assets in their portfolios because digital currencies weren’t considered trustworthy financial instruments, being largely associated with speculative behavior and unlawful practices. The scandals, lawsuits and bankruptcies that marked the industry didn’t help much with building confidence.

However, over the past years, the public perception of crypto has changed significantly. The rise in institutional interest and adoption of crypto and advancements in crypto regulations have helped a lot in this respect, signaling trust in crypto’s potential as a reliable and legitimate financial instrument.

Diversification opportunities

Despite crypto’s growing involvement in mainstream finance, digital currencies maintain a relatively low correlation to conventional financial markets.

This means that the crypto market follows its own trends, somewhat independent of what’s happening outside of it. The factors influencing the price movements of stocks, bonds, and other traditional assets don’t have the same impact on crypto.

That makes digital currencies a potential solution for hedging against inflation and, subsequently, a good option for investors looking for diversification opportunities. A strong portfolio should include a mix of assets with different risk profiles in order to reduce overall risk and maximize potential returns.

Therefore, adding a financial instrument that is known to move in a different direction than the rest of the markets sounds like a good idea for those who only hold conventional assets.

Dissatisfaction with traditional finance

The issues impacting global finance, such as persistent inflation, the lack of access to banking products and services, and income inequality have caused people to lose trust in the institutions and organizations governing these financial systems.

In this context, dissatisfied individuals are naturally looking for alternatives that could help them address these challenges, and crypto emerges as a viable option. Touted as digital gold, crypto is often seen as a tool for the unbanked, having the ability to democratize finance.

Younger tech-savvy generations are particularly drawn to the concept that crypto proposes and are eager to take advantage of the benefits offered by a decentralized form of money that isn’t subjected to central controls.

FOMO also plays a part in the fact that crypto is gaining more ground as a trading tool. With influencers promoting different crypto projects, crypto news plastered all over social media and stories of people getting rich after investing in digital currencies, a lot of investors are feeling the pressure of getting into crypto out of sheer fear of missing out.

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