Cryptocurrencies experienced a real peak in 2017 and 2018. Prices rose daily and those who had invested correctly could make a lot of money with the digital currency. In the meantime, prices have fallen again and many investors are unsure whether it is still worth investing in cryptocurrencies.
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Is the investment worth it?
With the recent ups and downs of Bitcoin, doubts arise about the suitability of cryptocurrencies for countercyclical trading against the inflation trend.
A virtual currency that drops 70% from $68,000 to $20,000 during a period of galloping inflation is not helping to prevent inflation, but is part of the problem and contributing massively to demonetization.
On the other hand, within the last bull market from early 2020 to November, bitcoin managed to get from around 5,000 USD to 68,000 USD with readable charting.
Such a gross spread of 1200% within just under two years is sufficiently attractive even with suboptimal timing and creates cushions for inflation surges like the current one.
Advantages
For digital natives who have a good understanding of crypto and have market visibility into cryptocurrencies, cryptocurrencies are a useful addition to the investment strategy.
Digital natives have the opportunity to capitalize on their expertise by investing in cryptocurrencies. Engaging with this topic can lead to a positive feedback loop. Investment success motivates more engagement with the topic, which in turn leads to (after) more investment success.
I think Bitcoin is the first [cryptocurrency] that has the potential to change something like the world.
– Peter Thiel (co-founder of Paypal)
Cons
Cryptocurrencies still live in a world of their own. While Bitcoin & Co. are gaining greater acceptance in the real economy, the terminology, technology and infrastructure – still – seem like they come from another planet.
Even mining Bitcoins requires expert knowledge of numerical data processing and special hardware; moreover, it is a considerable risk to try one’s hand at energy-intensive data processing as a beginner in a phase of exorbitantly rising energy costs.
