Cryptocurrency investing: Why you SHOULDN’T look at price changes – expert

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Cryptocurrency markets have lit up with activity from investors recently; many looking to get on board with blossoming altcoins. Several, including Dogecoin and SafeMoon, have started their approach to the dollar, with growth outmatching established coins despite the value disparity. Their success has captured a host of new investors, many of whom will want to find the next big token.

The cryptocurrency is inherently volatile, and nigh on impossible to target which token could surge in price next.

As such, people may find themselves losing money with several failed investments.

While there is no surefire way to make money, experts believe people should focus on metrics other than price.

Alan Vey, CEO and Co-Founder at Aventus Network, a company that streamlines Ethereum application to NFT’s, explained what investors could do instead to get some bang for their buck.

He explained: “When you think about investing in cryptocurrency, most people think about buying some bitcoin in the morning, waiting to see if it goes up a few percent, and then selling for a profit at the end of the day.

“As the world of crypto investing matures, the ways in which people can invest in cryptocurrencies expands.

“For instance, one way that more and more people are making the most out of their crypto is ‘staking’ it.”

How well a currency would stake should help people pick which one is right for them, Mr Vey added.

He said: “If you owned, for instance, Ethereum tokens, you could stake these and earn an additional percentage of revenue on your stake.

“This works a little bit like a more democratic, slightly more risky investment bank account – with much higher average yields.

“If I were looking at which cryptocurrency to invest in today, I wouldn’t just be looking at how much its price changes. I’d be looking at how I can make that currency work for me in the long term.”

While investors can make sizeable returns from staking, the practice comes with risks attached.

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One potential risk is the rampant crypto market volatility.

An extreme value move like the recent dip in bitcoin would see people lose earnings despite healthy earnings from a stake.

Experts recommend people base staking decisions on factors other than Annual Percentage Yield (APY).

In a similar vein, people should also keep an eye on liquidity.

Considering liquidity is a must at the moment, considering the increased interest in altcoins.

Little-known tokens with barely any liquidity will make it tough to sell an asset.

Poor liquidity will also mess with an investor’s ability to convert returns into new coins.

Higher trading volumes will balance the risk when it comes to staking.

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