Investors should remember Bitcoin is a highly volatile asset. In fact, it has lost over half its value several times over the last decade. For instance, between December 2017 and December 2018, the price of a token fell more than 80% — and it’s possible (perhaps even likely) that a similar event will occur again.
However, for investors who can tolerate that type of risk and volatility, Bitcoin could be a rewarding long-term investment.
Here are three reasons Bitcoin could double your money (and more).
- Bitcoin is powered by blockchain
- Bitcoin benefits from scarcity
- Bitcoin is the most popular cryptocurrency
Cryptocurrency exchange tokens fulfill a variety of important roles for the platforms they operate on.
For one, they can increase both liquidity and trading activity. Liquidity on an exchange refers to the ability of a token to be converted to another cryptocurrency or fiat currency. Native exchange tokens can be used as an incentive to increase liquidity on the exchange by allocating rewards for trading volumes, or for users that stake tokens.
The financial system is developing, and DeFi is making a significant contribution to this ongoing transformation. Exchanges are also playing their part in this development by increasing accessibility to decentralized finance for their clients. Storing their assets on an exchange is reassuring to many customers, because this way there are people who they can ask for help if something goes wrong. This helps with alleviating fears and attracting more users to the DeFi space.
Options strategies provide excellent opportunities for traders who have a fixed-range target for an asset. Using leveraged futures contracts also allows traders to leverage the position, although the stop loss decreases the trade’s viability.
On the other hand, a trader can create a slightly bullish strategy using multiple put (sell) options. The front spread with puts allows gains with no upfront cost other than the margin requirements for a negative price swing. The same pattern can be used in both bullish and bearish circumstances, depending on the investor’s expectations.