How To Evaluate Crypto And Return On Investment For Investors

Cryptocurrencies have easily been one of the most disruptive innovations in the finance and investment ecosystem of the world. This is new-age digital asset has taken the world by storm since 2008 and continues to attract new investors on a daily basis. However, investment in cryptocurrency has been a dubious affair for multiple reasons.

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While some investors have become millionaires or even billionaires, there have been instances where investors have lost a ton of money. The extreme volatility of this ecosystem is an extremely important constant that needs to be factored in, before you decide to invest money in this new-age asset class.

Bitcoin and other stable coins

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Bitcoin is undoubtedly the most popular and the most valuable cryptocurrency out there with a market capital upward of USD 900 billion. The trajectory of other key coins like Ethereum, Dogecoin, Litecoin, Ripple, etc. depend on the price movements of Bitcoin. Even though highly volatile in nature, Bitcoin has established its mark as an alternative new age investment instrument. The global acceptance and the borderless valuation of Bitcoin has made it very attractive for investors who are eyeing alternative instruments.

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From an RoI perspective, Bitcoin has delivered stellar returns for investors who have been patient with it over the years. The token has delivered over 130% returns (year to date) despite coming down significantly below its all-time high of USD 67,000. This valuation of Bitcoin has risen consistently every year from breaking the USD 5,000 barrier in 2017 to jumping over USD 60,000 in the year 2021.

While Bitcoin has been the most popular cryptocurrency in the investor fraternity, there are noteworthy coins that have also grown in stature and vale 每 Ethereum, Litecoin, Ripple, etc. These coins are considered safe in the long run and have also delivered stellar returns to investors. Ethereum was priced between a range of USD 200 每 250 back in 2015 and has recently shattered it＊s all time high by comfortably crossing the USD 4,000 barrier.

New coins attracting new investors

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The only challenge for new investors is that the price points of Bitcoin and Ethereum are so high, it would be impossible for them to accumulate larger quantities. That is why coins like Doge, Shiba, etc. are gaining traction on a daily basis, simply because first time investors can easily buy 1,000 每 10,000 of these coins on the current market value.

While Dogecoin is constantly hovering around the 30 cent mark, Shiba Inu comes at a much cheaper price. However, since their valuation is on the cheaper side, they have attracted maximum investors the past 6 months alone. This is evident in the constantly rising market cap of both coins 每 both having a market cap of around USD 450 million.

Conclusion

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One needs to be very careful in terms of investing in crypto. Yes, it is the future, however, the present seems to be a bit blurry. Especially when it comes to government regulations and safety of the investors. There is no doubt that most people who have invested in crypto have made sizeable gains, that have been unheard of in the traditional finance industry.

At the same time, you need to be aware of the coins that you are investing in before taking any steps. It＊s as good as doing research on the companies, whose stock you want to purchase. The only difference here is that over a period of time, the returns in crypto easily exceed the returns that you could fetch from traditional financial assets.

About the author: Praveen Kumar is the Founder and CEO, Belfrics Group. Views expressed here are author's alone.