The New World of Cryptocurrency And Where Is It Headed?

Cryptocurrency is known for being a volatile, high-risk investment, but as more people learn about it and grasp what it is and how it works, more and more are becoming intrigued by the potential to boost their income by investing. Cryptocurrency like Bitcoin has seen extraordinary returns in recent years, and several developments suggest a positive trend will continue for crypto and investors. 

Where is Cryptocurrency Headed?

This year has been great for crypto. With Bitcoin reaching an all-time high price, regulatory talks will significantly impact the industry. People’s interest in crypto has also skyrocketed in 2021, making it a hot topic in the investment world and pop culture. 

Unfortunately, cryptocurrency is still in its opening and continues to evolve, making it difficult to predict where things are headed in the future. However, in the coming months, many experts are following regulations and institutional adoption of cryptocurrency payments to try to understand more about the market. 

Exact predictions on any investment are virtually impossible, but cryptocurrency is even more difficult to predict. That being said, a few things going on in the world of crypto can give us an idea of where it’s headed. 

Regulation

Soon, expect a continued conversation about the regulation of cryptocurrency. Lawmakers and regulators around the globe are trying to find out how to establish laws to make investing in cryptocurrency safer. Because crypto attracts criminals because it isn’t currently regulated, lawmakers want to make crypto less appealing. 

China, in particular, has started to crack down on these digital currencies with crypto mining regulations. Additionally, the US has considered new regulations to make cryptocurrency taxable. 

Many in the industry would welcome clearer regulation on crypto to make investing easier and safer, but regulation comes with problems. Some agencies would and would not have jurisdiction over crypto, and it would differ by state. 

Clear regulation would help investment firms and independent investors know exactly what they need to do. 

The new regulation would make it easier for the IRS to find tax evasion, but investors should already be keeping records of gains and losses on their assets. New rules, however, would make it easier for investors to properly report their transactions. You can use a professional tax software, to help simplify the process. 

If new regulation passes, then exchanges will issue 1099-B forms to investors, which can reduce stress when it comes to filing taxes. Unfortunately, regulations can also impact the price of the cryptocurrency in an already volatile market where investors should never invest more than what they are capable of losing. 

EFT Approval

Investors have access to crypto EFTs, which represent a more conventional way of investing. An EFT allows investors to buy directly from brokerages they already have accounts with. 

EFT approval is being considered by the SEC, but there have been no greenlit efforts yet when it comes to approval. Most experts believe approval should happen within the next few months to a few years. 

As of right now, there are no approved EFTs in the US, but approval would mean more investors in the US, which can influence the global market. Instead of navigating an exchange, investors could add cryptocurrency to their portfolio from the same brokerage. 

Even with an EFT, the crypto investment would still carry risk, but different cryptocurrencies could still diversify portfolios. If an investor is not willing to lose a sum of money, then it’s not a good idea to invest in crypto yet. 

Institutional Adoption

More mainstream companies are taking an interest in cryptocurrency and blockchain this year. Many are already accepting bitcoin, while Fintech companies like Square are planning on allowing users to buy on their platforms. With so many household names accepting crypto, more and more will buy-in. 

Many experts expect that global corporations will begin adopting cryptocurrency payments this year or next. Large companies like big banks can add more credibility to cryptocurrency. 

Paying for things in crypto doesn’t make sense for many people right now, but with more retailers accepting payments in cryptocurrency, that attitude might change in the future. 

It will likely be years before spending Bitcoin on goods and services is widespread, but if more companies adopt these payment solutions, then it’s a possibility in the future. Bitcoin prices are sure to increase if cryptocurrency becomes used in everyday situations. As there’s more demand, the value will increase. 

Bitcoin

Bitcoin is the largest name in crypto, which is why experts look to it to understand the market as a whole. Bitcoin’s price has fluctuated immensely this year alone, making it one of the most volatile investments. Predicting how high Bitcoins prices will go is difficult to predict, but the company’s past can give us some clues. 

Since its inception, Bitcoin has had spikes followed by pullbacks, which allows experts to predict that Bitcoin investments are volatile in the short term, but you can expect growth in the long term.

Volatility is something new investors typically avoid, but for experienced investors, it’s the reason to play in the long run. If you buy for long-term potential, then you don’t have to worry about short-term volatility. 

The Future of Crypto

While we can speculate on crypto’s value for investors in the next few months and years, we still can’t predict much. Crypto is still a very new and volatile investment. Without having much history like stocks, it’s difficult to base predictions. No matter what experts say, nobody knows what the future holds for crypto and its investors. 

As we’ve stated multiple times, you should only invest what you are prepared to lose when it comes to volatile investments. Your cryptocurrency investments should not be more than 5% of your total portfolio. While taking on risk is nothing new for experienced investors, the key is to take a calculated risk. Take time to learn about cryptocurrency and bitcoin, so you have a better understanding of where you want to begin your investment.

Investing is something you can start at any age with the proper knowledge and tools. However, by keeping your investments small, you can spare yourself a lot of trouble in the future. Never put crypto over any other investment, such as your retirement accounts. 

Matt Casadona

Matt Casadona has a Bachelor of Science in Business Administration, with a concentration in Marketing and a minor in Psychology. Matt is passionate about marketing and business strategy and enjoys San Diego life, traveling, and music.