Summary
- Blockchain technology expanded its role to NFTs, now a $10.7 billion market;
- Bitcoin and Ethereum are having a solid year and the expectation is to continue increasing their values;
- Price volatility still exists and may concern investors who want to enter this market;
- I Know the First algorithm can mitigate the risks without impacting the asset return.
The Timing Looks Good
Cryptocurrency is not exactly new in the investment world. In fact, it has been a solid asset over the last few years. What we are seeing nowadays is not only the cryptocurrencies themselves, but the whole blockchain technology expanding its roles.
The non-fungible tokens (NFTs) market skyrocketed over the course of 2021. According to DappRadar, NFT sales volume achieved 10.7 billion dollars in the third quarter of this year. The number looks even more impressive when compared to the first quarter when the market size was “only” $1.2 billion.
Plus, not only these alternative markets are doing well. Ethereum jumped to 4,521 dollars this week, a new record for the cryptocurrency. According to Goldman Sachs, Ether could reach $8,000 in the next two months depending on the inflation level.
Bitcoin, the world’s most popular cryptocurrency, is operating right now above the $60,000 dollars level. For comparison purposes, BTC reached $15,000 in November of last year.
What Should I Be Concerned Of?
Like every other investment, putting your money in cryptocurrencies has risks. The biggest concern is obviously the volatility. For example, Bitcoin’s price fell 30% before stabilizing by 12% in a single day from May 2021. Over the last five years, the monthly percentage of Bitcoin price in American dollars had an annualized volatility of 90%. The number looks scarier when compared to the S&P 500 (15.3%) and gold price (13.4%). A recent report from Deutsche Bank also indicated an expectation for Bitcoin price to remain “ultra-volatile” due to its limited tradability.
Moreover, the eight thousand dollars price target for Ethereum from Goldman Sachs is based on the inflation expectation. As mentioned by Goldman, central banks will not be willing to let inflation keeps rising, which may stall Ethereum’s price increase.
Also, volatility comes even higher when looking at other cryptocurrencies besides the biggest ones. Recently, a crypto coin named SQUID took the news after going from 12 cents to 6 dollars, a 5,000% increase. The cryptocurrency, based on the Netflix series Squid Game, plummeted. From $628, SQUID is now operating near $0. DOGE, a top 10 cryptocurrency in market size, often sees its price fluctuating after Elon Musk’s tweets about it.
Mitigate Risks Is Easier Than You Think
Back in May, the I Know First AI-powered algorithm high signaled Ethereum for a one-year time horizon. Since then, ETH elevated its price by over 60%, being negotiated over $4.300 since the start of November. Using artificial intelligence and machine learning, our algorithm is able to provide accurate forecasts for different assets in different time horizons for both short and long positions. Cryptocurrencies, obviously, are part of it.
This week, we saw the Bitcoin package delivering returns up to 86.59% to our clients in just three months. Even though the price fluctuation and all the volatility in crypto coins, our algorithm was able to predict correctly the movement of currencies such as Bitcoin, Ethereum, and DogeCoin. The package average stood at 35.94% while the S&P 500 had a 5.36% return in the same period. In other words, our AI mitigated the risk from cryptocurrencies and provided solid results at the same time.
The same could be seen in other time spans. From a 3 days perspective, the algorithm delivered a 12.05% overall average return even though DOGE plunged 8.78% during the time. Despite the volatility of the currencies, the AI was still able to provide a good investment opportunity.
Due to high demand, we expanded our cryptocurrencies coverage. We now offer coverage for over 110 different cryptocurrencies (click here for the list) and our clients can get better commissions from Binance by clicking here and from Bittrex here.
Conclusion
With cryptocurrencies becoming even more popular in 2021, investment opportunities came along with them. Blockchain technology provided a whole new market with NFTs, which volume surpassed $10 billion dollars in 2021. More than that, crypto coins themselves are enjoying a good year in terms of the price increase.
Even though exists concerns about the price volatility from them, there are tools that can help you invest in cryptocurrencies without greater risks. The I Know First algorithm proved that is possible to invest in these assets without being exposed to high risks and at the same time to enjoy returns higher than the indexes.
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