When a recession is on the horizon for the US economy, many people flock to more stable investments. In the past, these have been bonds, gold, and silver. However, the invention of cryptocurrency has given investors another way to make a profit in a tanking economy.
The cryptocurrency market can be intimidating to new investors, especially if they are used to the somewhat steady trends of the US stock market. Cryptocurrency markets are often volatile, gaining and losing hundreds of dollars in value in a single day, depending on the coin. While the volatility may scare off those who are still reeling from a big loss in the US stock market, knowing how to track the digital currency market can help investors make huge gains.
COVID-19 and the US Economy
When COVID-19 first gained a foothold in the United States, state and local governments responded by enacting unprecedented executive orders to halt all non-essential work, encouraging residents to limit contact with each other and stay home to stay safe. The result was an abrupt cessation of production and consumption and led to a major drop in the US stock market.
Many people are eager to kickstart the economy again and return to normal life. Many government officials and employers are planning out when and how to reopen the US, but there is still much uncertainty surrounding when that will happen. The more time that the US spends in lockdown, the more likely the US will enter a long-lasting recession.
The US economy doesn’t exist in a bubble and relies heavily on trades with other countries to stay afloat. Just as the US has initiated lockdowns to slow the spread of the novel coronavirus, so have many countries around the globe. This will probably lead to a global recession and adds to the uncertainty of how serious it will be and how long it will last.
Reasons to Invest in Cryptocurrency During the looming Recession
The chief concerns of most people during an economic recession are preventing the loss of wealth and preserving their source of income. Digital currencies like Bitcoin offer a way for people to make a profit on their investment and preserve their wealth elsewhere while the US and global economies recover. This is because the US stock market and the cryptocurrency market do not always mirror each other. While some major events can negatively impact both, the value of coins like Bitcoin often recovers faster than the stock market.
How to Track Cryptocurrency Markets
During March and April, coins like Bitcoin saw wild changes in value. It dropped to its lowest price in 10 months and recovered over half its losses in just a couple of weeks. Being able to track these gains and losses accurately is key to making a profit trading cryptocurrency. Below is a guide on how to do just that.
How to View Your Cryptocurrency
Cryptocurrency is entirely digital, so there is no physical coin to hold and count. Instead, investors rely solely on digital information and storage. For those new to trading cryptocurrency, it may be confusing to decide where their coins are stored and how to access them.
All coins are stored in a person’s cryptocurrency wallet. A wallet can be a physical device or a service offered by a cryptocurrency exchange. These wallets track ownership of coins, as well as hold transaction histories and coin balance information. Wallets contain two cryptographic keys, one that is public and one that is private. The public key is the one a person can use to receive coin payments, while the private key is used to spend coins.
Physical devices that serve as a person’s wallet are the most secure type, as they are not connected to the internet and cannot be hacked. However, they are more difficult to use actively and not the best option for making fast trades. Using secure Bitcoin platforms like xCoins.io is a secure way to store coins and make instant trades at will.
Not only do these exchanges allow a person to store, spend, and receive coins, but many of them help people track the price of Bitcoin and many other less well-known coins. Popular exchanges like Coinbase or Binance have elaborate graphs showing sale trends for a wide range of coins. However, these exchanges sometimes suffer from long transaction times and may not allow investors to pay with credit cards or PayPal. Instead, investors should consider using these platforms to track coin trends while using a faster, more versatile exchange to make a trade.
How to Protect Against Losses
Protecting against losses in the value of Bitcoin or other cryptocurrencies has a lot to do with the ability to predict downturns and how fast a person’s chosen exchange can complete a transaction. For example, Bitcoin trades can take several minutes to complete, during which time the value can change drastically. If the price of Bitcoin drops during that time, a person could end up losing money in a trade when they were attempting to make a profit.
Predicting downturns in the cryptocurrency market is difficult. Even the most seasoned trading experts can get it wrong, and the result can be dramatic. However, combining three main types of market analysis gives investors the best chance of making accurate predictions.
The three types of analysis are technical, fundamental, and sentimental. Technical analysis involves checking historical trading activity, such as trading volume and price movement, to identify statistical trends.
Fundamental analysis uses large trends, such as the economy and the way the company is behaving, to determine where the market will go. In cryptocurrency, this often involves looking into the company that created the coin, why they created it and what their goals are, and how the public is responding to their ideals.
Sentimental analysis involves closely watching major market influencers and journalists to see what they are reporting about Bitcoin and other cryptocurrencies. A single tweet about a coin could spark a bout of panic selling, which will tank the price. Investors who get this information first can protect their investment by making a move before the price drops significantly.
Choosing the Right Exchange
One of the most important things a person can do to protect against losses is to find an exchange that offers instant transactions. Because Bitcoin trading relies on the use of a network of supercomputers to verify blockchain transactions, it can take up to ten minutes to complete a sale. Platforms like xCoins.io have systems that allow investors to bypass the wait times and make sales immediately, giving them full control over when the trade takes place.
xCoins.io has an added layer of protection for buyers that other exchanges do not have. When a person buys bitcoin from a lender on xCoins.io, they have the option of returning the coins if they no longer need them or find a better rate elsewhere. This allows buyers to maximize their profits and avoid potential losses.
How to Anticipate Gains
Anticipating gains involves using the same analysis techniques that investors would use to protect against losses. However, it is a good idea to look into rules and regulations that surround the legality of trading cryptocurrency around the world, as well.
Because cryptocurrency trading is fairly new, many countries are still developing regulations and laws regarding how to track and tax trades. When a country’s government accepts cryptocurrency as an asset and discusses taxing it, it adds legitimacy to the coins as a valid source of wealth. This will boost the price of most coins, but especially Bitcoin.
Finding Certainty in Uncertain Times
As the COVID-19 global pandemic lingers on, the likelihood of making a profit by investing in the US stock market dwindles. The long-term consequences of a widespread, extended economic shutdown are unclear, making it difficult for people to know when they can expect to make money again. The United States of America has experienced recessions periodically, but the far-reaching effects of this pandemic may change the way people live their lives for years.
When the US economy falters and the dollar standard comes into question, people need to know there are ways that they can financial guard themselves against financial ruin. Traditional means of securing wealth are less and less useful, as gold and silver prices have not been holding strong, either.
Instead, individuals can use new and innovative ways of generating wealth in a tanking economy. Bitcoin and other cryptocurrencies provide a haven for those who want to step away from the US stock market until its trajectory is clearer or things begin to heal. The markets can experience volatility, but wide swings in coin values still include massive gains and present the opportunity to make a profit.
Using reputable platforms with instant transactions and buyer protections, like xCoins.io, helps individuals make money while minimizing the risks involved with trading coins in a volatile market. Investors can rest assured they are protected while the world is still reeling from a major economic crisis because of COVID-19.