Crypto markets including Bitcoin have recovered from last week’s drop.
But what is causing these rallies and should investors be thinking about entering these extremely volatile markets?
Bitcoin was up 1.93% this afternoon, to $58,404.06, and Ethereum was up 7.29% to $4,667.98 at press time.
Solana is up 2.51% to $213.89, Cardano is up 1.38% to $1.60, and XRP is up 3.99% to $1.03, according to Coinmarket caps.
The total market is up 3.4% in the last 24 hours.
Why Are Cryptocurrencies Rising?
The first thing to know is electronic money are highly volatile, which means their prices can rise and fall in the blink of an eye.
You should only invest if you can afford to lose money.
These types of investments are complex and prone to fraud. Don’t part with any cash unless you’re excited about the risk that you might not get it back.
While a lot of these virtual currencies are currently experiencing spikes in price, they can easily plunge without any notice.
The crypto market is bullish today but it is still trading volatile.
Bitcoin is currently recovering from last week’s lows and has bounced back to reach over $58,000.
But that number is still down from the peak of $68,000 it hit earlier this month.
Read ours Cryptocurrency live blog for the latest Bitcoin updates
One reason for last week’s drop could be a statement from US banking regulators, alluding to a potential crackdown on cryptocurrencies and increased regulation.
The agencies have identified several areas that require further clarification. “Throughout 2022, the authorities plan to provide more clarity on whether certain crypto-asset-related activities carried out by banking institutions are legally permissible. and expectations of safety and wellness, consumer protection, and compliance with applicable laws and regulations.”
It is unclear what is currently causing the bounce back, but it could have been caused by investors buying bitcoin while the price was lower.
One of them is believed to be El Salvador, which bought another 100 bitcoins last week, according to exchange Coindesk.
It will be built near the Conchagua volcano to utilize geothermal energy to power the city and mine Bitcoin, which requires a lot of energy to solve complex mathematical calculations.
El Salvador’s president said there would also be no real estate, income or municipal taxes and that the city would have zero carbon dioxide emissions.
Why is investing in crypto so risky?
All investments can rise as well as fall, but cryptocurrency is much more volatile than many other asset classes, which means it carries a very high risk.
All cryptocurrencies are speculative investments, with a limited track record, so it’s hard to predict what will happen next.
There are also significant concerns that many of these currencies are an investment bubble that could burst, leaving investors with nothing to go by as prices fall.
There is no guarantee that you will be able to convert your virtual currencies into cash, as it may depend on demand and supply in the current market.
With so few options for “spending” money – you can be stuck with assets that are plummeting in value.
Cryptocurrency companies are not regulated the way other financial services and investment firms are. This means you won’t have any protections if something goes wrong.
You will not be able to file a complaint with the Financial Ombudsman Service and will not have any protections if, for example, companies go bankrupt.
Cryptocurrency businesses in the UK must register with the Financial Conduct Authority Sign up for Financial Services – but the watchdog does not have any authority over how it conducts its business.
In fact, in January, the Financial Conduct Authority warned that Britons risk losing ALL of their money if they invest in cryptocurrencies.
Ms Streeter said: “Investors would be wise to heed warnings from the Financial Conduct Authority that using products they don’t fully understand could have a serious impact on their wallets. , as they risk losing all the money they have put in.
“More and more traders are being persuaded by social media influencers and buzzing around on internet forums.
“The FCA research has shown that many people who put money into high-risk products appear to be thrill seekers who are investing for a challenge or for competition.”
How to make sure you avoid being scammed
If you want to invest in cryptocurrencies, you need to make sure you do your research thoroughly.
You can start by checking this out list of unregistered businesses with FCA. If a company is on this list, they may be operating illegally.
The crypto market is a target for fraud, with more than £2 million in losses to the scam – that’s more than £10,000 per person – between June and July 2018, according to Action Fraud.
If that sounds too good to be true, it probably is – so avoid anything that promises sky-high returns or has heavy marketing offers.
Do your research thoroughly and make sure you understand how the business works, how it plans to monetize and grow, and learn about the people who founded the business.
From Dogecoin and Litecoin to Bitcoin – explain different cryptocurrencies.
Twitter is “profit from posts promoting Bitcoin scams” featuring the youngest millionaire in the UK.
Meanwhile, a painter lost home and £66,000 in life savings after falling for a Bitcoin investment scam.
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https://www.thesun.co.uk/money/14859967/why-cryptocurrency-market-going-up/ Why is the cryptocurrency market bullish?