2 Money : Cryptocurrency

One of the factors to consider before investing is "Volatility." Volatility is how a fund's net asset value typically fluctuates. It is caused by uncertainty, influenced by interest rates, tax changes, inflation rates, and other monetary policies. It is also affected by industry changes and national and global events.

Cryptos and Volatility are like "Siamese twins"

Trading in cryptocurrencies is a high-risk and speculative activity, and it is essential that an investor understands the risks before he trades. Cryptos are highly volatile: unexpected changes in market sentiment can lead to sharp and sudden moves in price, and that's enough to spook some investors. If you're already uneasy about owning stocks, you'll need to prepare for an even more wild ride with cryptocurrency.

Some time ago, the CEO of an electric car company said he would accept bitcoins to purchase their cars, which they later reneged, claiming the environmental impact of mining cryptos was too much. The initial offer and withdrawal sent bitcoins valuation through the roof and back to earth.

Cryptocurrency is powered by blockchain technology which requires transactions to be updated regularly by all ledger owners. The process of mining bitcoins consumes so much electricity and hurts the environment.

Central banks do not regulate cryptos, and buyers' demand drives the price valuations. In 2018, the CEO of QuadrigaCX, Gerald Cotten, died suddenly and took keys to $250 million in cryptocurrency assets to his grave. Investors were unable to recover their money.

While some investors have cashed out big from technology stocks and cryptos, I will strongly advise people to be extra careful and hold minimal cryptos in their portfolios.