Being volatile assets by nature, cryptocurrencies are difficult to forecast regarding the further development of their exchange rates. Investing carries risks, especially if it is an investment in cryptocurrency. Such an asset has no material expression and exists only in digital format. Given the volatility of cryptocurrencies, it is important to do your research on the potential gains and losses of your investment before purchasing Bitcoin in Nigeria or other countries. One of the most striking advantages of cryptocurrencies is decentralization, which ensures financial freedom and independence of users.
Currently, cryptocurrencies are subject to regulation depending on geography. That includes a set of government norms and rules regarding the activities of crypto market participants. Among the key issues, regulation concerns the interests of users, protecting the rights of investors who want to buy Bitcoin instantly, prohibiting the use of cryptocurrency for money laundering, and much more. Each state sets its own levels of severity of restrictions and transparency of compliance with these requirements. The reasons why cryptocurrencies need regulation are quite clear:
1. Widespread use of cryptocurrencies due to the speed and cheapness of transactions
2. Data anonymity
3. High volatility rates
4. Susceptibility to hacker attacks
5. Possibility to avoid taxes
Every year, control over the regulation of the crypto market increases and becomes stricter. The state may force cryptocurrency exchanges to provide regular financial reporting. There is reason to believe that with an increase in the level of control, centralized exchanges will see an outflow of coins every year. Given the growing geopolitical tensions and economic climate, the crypto market will continue to experience pressure. Given the recent bankruptcy of large crypto funds, it is likely that the prices of major cryptocurrencies are expected to decline for a short period.
In May of this year, pressure from the US Securities and Exchange Commission (SEC) and other regulators caused the value of Bitcoin and other leading cryptocurrencies to decline significantly from their previous highs. However, there is reason to believe that by the end of the year, the growth in the value of crypto assets will catch up with the previous gap.
What Affects Cryptocurrency Prices
The price of cryptocurrencies basically depends on the relationship between supply and demand. The following factors influence the cryptocurrency rate:
- The prevalent economic situation in the world;
- The degree of people’s trust in cryptocurrency;
- Launches of new projects;
- Technical factors;
- Laws and government actions.
Sometimes, people’s trust is affected by events related to large thefts of user data from crypto exchanges, and hacking of accounts that occurred due to security vulnerabilities. In many ways, the level of quotes is influenced by the news background: negative events repeatedly reduce demand in the virtual money market, while others, on the contrary, increase the frequency of requests on the topic “how to buy cryptocurrency with a credit card.” And unlike fiat money, cryptocurrencies are backed only by market capitalization.
With the greatest benefit, you can purchase cryptocurrencies on large trading platforms with high liquidity and buy Bitcoins in Nigeria. Unlike traditional currencies, the supply of Bitcoins is physically limited, but the instability of the economic situation is pushing residents of many countries to use cryptocurrency instead of the traditional one, using exchangers in Nigeria. At the moment, investors are cautious due to ongoing volatility amid a turbulent macroeconomic environment.
How to Independently Predict Exchange Rates
For successful investments, daily monitoring, study of market trends, news background and technical analysis are important. Superficial analytics will not give long-term results and will immediately result in the loss of existing crypto assets for beginners. Understanding cryptocurrency price movements and forecasting them requires a deep understanding of economic processes, a detailed analysis of external factors and an understanding of the characteristics of the market. It is worth starting with basic concepts, studying the features of different types of coins, crypto exchanges and decentralized trading platforms. Before you buy Bitcoin with a credit card, here are some things to keep in mind when investing in cryptocurrency:
1. Any currency is subject to both growth and fall. Many new investors have high hopes for their assets, but even the most reliable investments sometimes lose value.
2. In the case of statements about a guarantee of high return on investments, deception and manipulation are most likely. No one can give such guarantees in the crypto market.
3. If a crypto investor does not understand the essence of the project, it is better not to invest in it. Otherwise, it will be difficult to assess the prospects of investments.
Cryptocurrencies such as Bitcoin or Ethereum are the most common and promising, and therefore do not require deep monitoring. Unfortunately, it is impossible to completely eliminate risks, but one can greatly reduce their likelihood if they buy Bitcoins in Nigeria.
Asset Diversification
One of the best ways to protect investments is diversification. The idea is to allocate assets to reduce overall risk and create a balanced portfolio. Using this principle, you can distribute your own investments among types of crypto-assets, for example, allocate the bulk to Bitcoin and Ethereum. And the remaining shares will be evenly distributed among cryptocurrencies with large, medium and small capitalization. The benefits of diversification are as follows:
- Stabilization of total portfolio value;
- Flexibility in balancing investments;
- Minimizing risks.
Diversification can also be manifested in the choice of cryptocurrency exchanges, types of industries, etc. It is necessary to constantly keep your finger on the pulse, analyzing the state of the market and the emergence of new trends, for example, the use of cryptocurrency exchanges in Nigeria. Due to the high volatility of the crypto market, portfolio diversification is the best way to protect assets. Investments in this case can be strategic, with the expectation of passive investors buying stable cryptocurrencies that guarantee profit in the long term. And also tactical ones, which are typical for more active crypto investors who are ready to invest in a new promising direction.
A problem that novice investors often face is the difficulty of assessing the risk level of crypto assets. Before one decides to buy Bitcoin in Nigeria, and to understand safe and profitable investment directions, you need to study in detail the information on the assets of interest, turning to different sources. Comparative analysis and decision-making without haste greatly increases the chances of distributing investments in a competent manner. Of course, it is recommended to start with a small amount, investing progressively and studying the market at the same time. By investing in education, one can significantly speed up your understanding of cryptocurrency investments and approach this more and more consciously.
In case of lack of time and experience, many seek advice from specialists or traders of alternative currencies, who give recommendations on how to form an investment portfolio before buying cryptocurrency. Experts will talk about ways to minimize risks and choose an investment strategy. In order to avoid encountering unprofessionals, it is necessary to request a cryptocurrency license from a specialist, which gives the right to work with virtual assets.
Conclusion
At the moment, it is difficult to predict in which direction the rates of major cryptocurrencies will develop. Many experts believe that by the end of 2023 there will be a gradual increase against the backdrop of the previous downward trend. One of the first investment rules that you should adhere to in the near future is the diversification of crypto assets. A diversified portfolio will allow one to minimize risks and flexibly adapt to market demands.
