Understanding The Primary Rationale For Crypto Investments

If anyone knows anything about crypto, it’s that the market is currently a hotbed of activity. It is an investor’s market right now, and coins are seeing their prices surge at the moment. Even despite the crypto winter that started the year, several coins have been able to notch jumps in their prices.

But, there are also demerits for anything that has a good side. Now that the market seems to be in a slump, we’ve seen a lot of crypto detractors coming out to take victory laps and make fun of those who have believed in the industry.

Considering the many demerits of crypto – price volatility, possible environmental effects, and the propensity for theft and scams, among others – it’s easy to see why many people might not be into them so much. But, things aren’t quite the same. Coins like Ether are seeing increasing numbers of active wallets, while assets like the FTX Token have still delivered gains for their investors.

So, what exactly is drawing this influx of investors? Why are crypto investors doing their rounds at this moment? For now, there are several reasons for this:

We’ve been here before

One of the biggest reasons for the jump in crypto investors has been the fact that – for all intended purposes – the market has been here before. 2018’s crypto winter was one of the toughest in the market’s history, with Bitcoin’s price dropping from $19,600 to a low of $3,300. That’s a drop of more than 80%. 

Right now, Bitcoin is trading at a low of $32,400 after hitting $68,900 last year as part of the market’s huge jump. That’s a drop of just about 53%. So, if history is any indication, it’s that the market will eventually get back to the highs it is used to – and perhaps even earlier than most investors believe.

So, it’s a case of seeing crypto’s full potential right now. Investors know that there’s light at the end of the tunnel, and many of them seem willing to ride out the winter.   

Crypto itself is getting more useful

Another major factor why many investors put their money into cryptocurrencies is the fact that the technology that underpins them – blockchain technology – is becoming more effective.

Over the past few years, there has been growth in blockchain applications across different industries. At the same time, we’ve seen more companies adopting blockchain as they hope to scale their operations and grow as well. Even governments are getting into the trend as well – some governments are using blockchain to improve their operations across the board, while others have launched central bank digital currencies (CBDCs) with sponsorships and partnerships sponsored by blockchain platforms.

As more blockchains get new applications, we’ve seen increases in the prices of the assets tied to them. This is in compliance with a report from BDC consulting, which states that blockchains are attractive for several reasons – including the strength of their technology, the viability of their infrastructure, and possible partnerships they have with other developers.

One of the most perfect iterations of this has been Solana. The blockchain platform has been nothing short of a hit over the past year, thanks in part to increasing scalability issues with the Ethereum blockchain. Solana has signed on way more developers, and several projects being built on it have raised massive sums of money.

At the same time, Solana itself has entered into different fields. Just this month, the blockchain’s developers partnered with other companies to launch Solana Pay – a payment solution for eCommerce companies and point-of-sale merchants to accept cryptocurrencies as payments.

All of this has led to a massive jump in the price of Solana. In 2021 alone, the asset saw almost 10,000 per cent gains – even despite the market downturn that happened in the middle of the year.

As blockchains continue to see their uses expand, we’re likely to see more growth in the prices of the coins attached to them.

Spurred by influencers and institutions

We shouldn’t forget the role that finance professionals and institutional players have had in growing the crypto market as well. Last year, Elon Musk was all the rage as he made tweet after tweet promoting crypto. We also saw companies like Tesla and MicroStrategy that made massive investments in crypto and reaped significant benefits.

Moves like these will only reinforce the desire for everyday people to invest in crypto too. And so far, we’ve seen jumps in coin prices after major moves like these are announced. Everyone wants to be the next Musk, and some of them believe that crypto is the perfect way to do that.

Despite the growth, crypto is still nascent

It is also worth noting the fact that crypto is still in its early stages. According to reports, about 55% of people who invest in crypto right now only just began their journey in the past year. And, a survey from last year showed that only 1 in 10 people currently invest in crypto.

It’s easy to see the growth in the industry and believe that crypto has come far – and it has. But, the fact remains that the space is still nascent. Whether it’s due to countries keeping restrictions on these assets or people not necessarily knowing how crypto works, there’s still a lot of adoption to be seen.

Opportunistic investors who know the coins that are likely to get more adoption are already positioning themselves to make gains when this adoption spree finally rolls around. All in all, the market has proper fundamentals and won’t be changing anytime soon. 

Conclusion: Crypto is For All

Right now, the investment landscape is highly fragmented. However, crypto has proven to be something that everyone can invest in and get gains.

Whether you’re being opportunistic or you truly believe in the coins you’re investing in, there’s something for you always. It’s just a matter of how well you can execute your strategy. The full version of the study is available on the BDC Consulting website.

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