When it comes to cryptography, everyone knows Bitcoin. In fact, Bitcoin is much more widely known than the word “cryptocurrency” itself. The concept of a decentralized financial system has surprised everyone since its inception. And seeing it evolve as it is today is only a once-in-a-century example.
However, as we gained a better understanding of cryptocurrencies and participation, hundreds and thousands of new cryptocurrencies began to emerge. Some of them have failed miserably, but many have succeeded in becoming some of today’s best digital assets. Not surprisingly, people jumped in to invest in these digital assets, and soon a new kind of investment tool was realized.
But there are always some of these questions that people ask every time a crypto topic comes up-is it? Are Bitcoin and some Altcoins my only investment options? Is DeFi Really Worth It?
So here I answer the question of what else is there and share with you why Bitcoin and Altcoin are not the end of the line. Instead, they may actually be the beginning of a new world of investment.
Cryptocurrency
When talking about where to invest, it’s important to measure all types of existing crypto assets. And to do that, obviously, we need to analyze the top coins. The reason people rush to invest primarily in crypto is because of the ridiculous ROI these assets provide.
Throughout the year, Bitcoin prices rose almost 77% and the one-year ROI at press was around 161%. The fall in the market on December 4th has definitely led to a significant drop in Kingcoin and other altcoins. In fact, Bitcoin has reached the level of at least $ 43,000.
But if you’re wondering why BTC’s ROI is so low, it’s because Bitcoin is still as high as $ 51,000. Its rise and fall continue to maintain a tight structure that keeps volatility relatively minimal.
Bitcoin rises year by year | Source: TradingView – AMB Crypto
On the contrary, altcoin, which is less expensive this year, raged. Ethereum was very strong, with a ROI of 620% at the time of the press, but prices rose 501.8%. Still, there’s nothing to compete with 2021’s biggest hit, Solana.
SOL broke the market this year after the price of altcoin rose 13,292%, rising from $ 1.5 to $ 201.
Solana year-to-date rise | Source: TradingView – AMB Crypto
Altcoin’s ROI is an astonishing 10,976%, making it the most profitable asset of the year.
Things like Cardano and XRP weren’t disappointed as the coins rose 793% and 290%, respectively, and returned 789% and 32.8% profits.
RoI comparison | Source: Coinmetrics – AMB Crypto
The DeFi boom also played an important role in the rise of these altcoins.
However, these cryptocurrencies have also been the subject of criticism, more often than in most cases due to the precarious nature that many institutions have been forced to take drastic measures against them. The ongoing Securities and Exchange Commission v. Ripple Lab proceeding is a prime example.
Next was the issue of crypto trading and mining bans in China. It had a negative impact on the market as a whole, with the latter taking weeks to recover. Following the same, there was a FUD on India’s proposed crypto bill and what its content meant for the country’s strong crypto community.
But this volatility is also an investor concern.
A recent study by CoinShares found that the biggest problem investors face is volatility rather than regulation and accessibility.
Investor’s Biggest Cryptographic Investment Concerns | Source: CoinShares
Moreover, most investments in cryptocurrencies stem from the idea of ”gambling scams” rather than actually adopting the technology use cases behind them.
This has led people to consider other forms of crypto investment. This brings us …
Cryptographic-based enterprise
There are many blockchain companies that delve into the mining industry as a source of income, and they are also traded on traditional stock exchanges, but they are backed by cryptocurrencies. Some well-known examples of the same are HIVE Blockchain Technologies Ltd., Galaxy Digital, Bitfarms, all mining cryptocurrencies. As a result, their tickers witnessed successful growth over the course of a year.
Their hikes are in fact in line with most of the growth of top cryptocurrencies. HIVE offers a 1575% ROI, BITF (Bitfarms) promises a return on 1,166%, and Galaxy Digital’s GLXY offers a 369% return on investment.
HIVE Blockchain Technologies Ltd. RoI | Source: Blockchain
In addition to already established companies, there are also examples of crypto-based companies that use the SPAC method to plan and raise investments and become public companies.
Prime blockchain, Recent examples include over 10,300 rigs for BTC mining and 2,600 rigs for ETH mining. It will merge with 10X Capital Venture, with a total value of nearly $ 1.5 billion.
However, people still want to feel the heat of cryptography, but with the security of traditional investment routes.This led to the demand for …
Cryptographic-based listed trading products
Also known as ETPs, it includes ETFs and ETNs that have been the focus of investors for many years. Demand for ETFs has been so crazy this year that investors got what they really wanted at the ProShares Bitcoin ETF (BITO), launched during the SEC-Ripple proceedings on October 19.
Now, the reasons these ETFs are so popular are that they are a) SEC-approved and therefore not subject to legal objections, and b) they are easier to buy than real cryptocurrencies. , And c) Tax filing policy. actually, ETFs create taxable events only if they are sold.
Therefore, based on the holding period, these ETFs are subject to either long-term capital gains treatment (if held for more than one year) or short-term capital gains treatment (if held for less than one year).
GBTCs are just as important thanks to the 401k’s advantages when the ease of purchase and tax benefits are added to the debate. However, GBTC is not eligible as an ETF. Because it is based on trust, it qualifies as a company by regulation. As a result, GBTC’s share is limited. Still, with $ 37 billion worth of AUM, it’s arguably the largest cryptocurrency-backed investment tool on the market.
Grayscale Bitcoin AUM | Source: Grayscale
But even the ETF hype has witnessed the entire crypto market falling below November performance. In the first week of BITO’s launch, ETFs generated an inflow worth about $ 1.46 billion. The same number fell 79% this week to $ 305 million.
Weekly ETF inflow until November 26th | Source: CoinShares
But these are not …
Traditional investment vehicles have observed and used cryptographic hype to promote themselves. Tesla, Square Inc., and most notably MicroStrategy have accumulated Bitcoin and other altcoins to attract investors to the stock market.
And surprisingly, it paid off. All of these companies have seen tremendous growth this year. In fact, MicroStrategy is now the world’s largest Bitcoin corporate owner, earning 121,044 BTC in almost a year.
In any case, the biggest problem with crypto investment is not in front of you, but in what isn’t.
The true purpose of cryptocurrencies …
… It was decentralization. Bitcoin was created with the concept of decentralizing currencies and has been improved over the last 13 years to make it happen. And these crypto-based companies, ETPs, and traditional investment tools that take advantage of crypto hype prove that we are still far from achieving it.
Even today, when decentralized finance (DeFi) is being promoted, people still choose a centralized route. Despite the existence of decentralized exchanges (DEX), many people still choose centralized exchanges (CEX).
Pancake Swap, the top DEX on the market, currently processes $ 4.3 billion worth of transactions daily. Meanwhile, top CEX – Binance – manages trading volumes of approximately $ 29 billion in 24 hours.
Binance 24-hour volume during pressing | Source: CoinMarketCap
The consistent need for centralized investment options, represented by the most important demands of ETP and CEX, is a testament to the psychology of trust over the years, simply because centralized systems have a face.
So what’s the right way?
Well, in my opinion, there is no “right way”. All investment options come with their own Boon and Bain bags. While traditional relatively “secure” options are affected by limited growth, crypto assets can see a surge in value of over 100% in a single day.
But then they also experience sudden liquidations, declining demand, and excessive volatility that can harm your own investment.
Moreover, centralized options will not become obsolete as confidence in distributed systems grows. Because people always want a visible system to put their money into it. That’s why even investing through banks is a favorite of some people.
So, simply put, risk takers can chase traditional crypto investment options: cryptocurrencies, NFTs, crypto-based companies, and more.
And secure players who want to step into crypto without being exposed to undue risk can make more secure crypto investments such as ETFs, GBTCs, and crypto enthusiasts.
