Australians are increasingly interested in investing in these digital currencies. The following are the crypto industry’s powerhouses, although some are extremely risky.
Millions of Australians are looking to benefit from cryptocurrencies, as the value of some digital coins has risen dramatically in recent weeks.
Cryptocurrencies have increased in value over the last year, with some doubling in value 186 times, compared to a 47 percent increase in the stock market and a 10.4 percent increase in Sydney house prices.
According to Finder research, one in every four Australians has either invested in or plans to trade cryptocurrency this year, amounting to approximately five million citizens.
Australians currently invest in cryptocurrencies such as Bitcoin at a higher rate than they do in precious metals such as gold and silver, according to a cryptocurrency and digital asset exchange. BTC Exchanges.
The largest generation of crypto investors is between the ages of 25 and 34, with over a third investing in digital cash, followed by those between the ages of 35 and 44, according to BTC Markets’ data.
Additionally, it was discovered that one in three cryptocurrency investors made their first investment in Bitcoin or other cryptocurrencies following the March 2020 stock market crash precipitated by the COVID-19 pandemic.
Bitcoin is the most common cryptocurrency in Australia, followed by Ethereum, Ripple, Litecoin, and Bitcoin cash.
Caroline Bowler, CEO of BTC Markets, said that she is unsurprised that more Australians are now investing in cryptocurrency rather than fixed income, annuities, or commodities.
“Digital assets and cryptocurrencies are gaining traction with Australian investors of all ages,” she said.
“Over the last year, we’ve seen a change away from 25 to 45-year-old males and toward a much broader age group, especially early retirees interested in diversifying their investment portfolios and catching up to this fastest growing asset class.”
The majority of Australians are investing in cryptocurrency for the long term, rather than using it as a get rich fast scheme, she said.
According to its report, a quarter of Bitcoin investors usually keep their coins for one to three years.
Just under a quarter of Bitcoin holders have held it for more than three years, while 17.6 percent have held it for six to twelve months.
Just 8.6% of investors reported that they had kept Bitcoin for less than a week.
So, the cryptocurrencies are the most popular?
It is the most widely used alternative digital currency, with a growing number of businesses accepting it as payment, including Tesla, PayPal, and Mastercard. Even Sotheby’s is getting in on the act, with a Banksy artwork going under the hammer with cryptocurrency as a payment choice.
In April, Bitcoin fell 15% in 24 hours – the steepest drop in months.
The plunge came only days after the world’s most valuable cryptocurrency reached a record high of more than $US64,000 ($A82,755).
Between April 25 and May 5, it hovered around $70,088 in value and increased by 10.7 percent in a single week. Overall, it has risen by 423 percent in a year and is now worth more than $1 trillion, despite the coin’s limited supply of 21 million units.
Bitcoin currently accounts for 46% of the global cryptocurrency market, according to CoinGecko, but is prohibitively costly for many buyers, forcing them to purchase just a fraction of a coin.
Ethereum, sometimes referred to as Bitcoin’s “little brother,” is catching up as well.
According to Tony Sycamore, APAC market analyst at City Index, Bitcoin has spent the last month consolidating its gains after gaining more than 200 percent between mid-December and mid-April.
“Markets typically consolidate following significant moves, and digital assets are no exception,” he said. “Bitcoin dropped from near $65,000 to below $50,000 in late April as part of the consolidation and has remained in a holding pattern since. As a result, investors are looking for new possibilities in other sectors of the cryptocurrency industry, including Ethereum.”
Though it is possible for other coins to surpass Bitcoin, crypto expert Adam Morris, co-founder of Crypto Head, believes it is improbable.
“Bitcoin has cemented its place as the gold counterpart in this industry, and the majority of institutional investors are primarily investing in it as a store of wealth,” he explained.
Just last week, Ethereum’s price soared past $4206 for the first time, demonstrating the cryptocurrency’s growing momentum. It is now more valuable than Disney, PayPal, and Nestle combined.
In April, Ethereum’s development outpaced that of Bitcoin. It increased by 49.7 percent in one week, from a value of $2862. In comparison, the Australian share market grew by 49% in a year.
Over the last year, Ethereum has increased by a staggering 1385 percent. In comparison to Bitcoin, it also has an infinite supply, which can contribute to its popularity.
Ethereum’s founder, 27-year-old Russian-Canadian programmer Vitalik Buterin, has become a billionaire as a result of the cryptocurrency’s rise in value.
A portion of its newfound popularity is being attributed to the NFT craze, which has reintroduced it to the mainstream. NFT is a data unit that is stored on a decentralized digital ledger known as a blockchain, and Ethereum is the preferred cryptocurrency for the purchase of many NFTs.
In April, an NFT of the photo that inspired the infamous “Disaster Girl” meme fetched a mind-boggling $650,000.
Ethereum’s price has skyrocketed. It was selling for $13 at the start of 2017 and would cost only $193 in 2020. In aggregate, it now has a market capitalization of more than $US212 billion.
Ethereum is destined to be a crypto business leader in the long run, according to Mr Morris.
“It’s likely that Ethereum will continue to rise, and if history is any guide, we’ll likely see an all-time peak by the end of the year,” he said. “However, it is important to remember that we are in the midst of a market cycle, which can include significant corrections.”
Started as a joke cryptocurrency, this digital coin has seen a significant increase in value due to the backing of a billionaire.
It spiked dramatically prior to Tesla CEO Elon Musk’s appearance on famous American show Saturday Night Live, before plummeting during the show.
However, between April 25 and May 5, it increased by 137%, from 29.85 cents to 70.78 cents. In the last year, its price has increased 186 times, or 18,526 percent.
Mr Musk also inspired the price increase to $US1 at one point, which was accompanied by other celebrities promoting the spoof cryptocurrency on Twitter and other platforms.
Mr Morris explained that people invest in cryptocurrencies such as Dogecoin because they believe they can leverage their money into a much greater sum in a short period of time. “While it might be a good short-term investment, this gambling mindset results in bad long-term investment decisions. However, with a 1260 percent increase in the last month, it’s easy to see why retail investors will be drawn to invest,” he said.
“It is coins like this that are the first to lose 95% of their value in a market crash, as occurred in the 2018 crash. It carries an extremely high risk due to the fact that it has little tangible utility and has seen massive price rises as a result of celebrity endorsements and the gambling mindset of younger investors.
“If you invest in coins such as these, you must keep your finger on the pulse and be aware of the amount of risk you are taking.”
Created in 2011 by a former Google engineer, it has garnered considerable attention as one of the world’s best-performing cryptocurrencies in terms of price performance.
It increased by 49% in one week, reaching a value of $421.50. It has increased by 550 percent in a year, but its stock is limited to 84 million.
It was created to facilitate cheaper transactions and to be more effective in daily usage than Bitcoin, which was created to be used for long-term value storage.
Litecoin’s total market capitalization is currently around $US13.7 billion, while Bitcoin’s market capitalization is 70 times greater.
Similar to Ethereum, and coinciding with the lull in Bitcoin trading, the price of Litecoin has increased by more than 80% since late April, Mr Sycamore added.
Warnings from regulatory authorities
Bank of England governor Andrew Bailey, on the other hand, has taken a scathing stab at cryptocurrency investors, urging them to brace themselves for the possibility of losing all their capital to the online phenomenon.
He said that the uncertainty is cause for grave concern for everyone who has invested real money in cryptocurrency.
“They are worthless in and of themselves. That is not to suggest they are unvalued, as they may have extrinsic value. However, they have no intrinsic value,” he said, according to a CNBC article.
“I’m going to put it again plainly: buy them only if you’re prepared to risk your entire investment.”
Additionally, there is speculation that President Joe Biden’s administration could crack down on cryptocurrency due to concerns about its usage by criminals.
In Australia, Liberal senator Andrew Bragg, chairman of a parliamentary committee on financial technology regulation, has warned that additional regulation is necessary, especially for blockchain technology, which underpins cryptocurrency Bitcoin.
Additionally, he acknowledged that banks and law enforcement authorities are “flying blind” when it comes to discriminating between legal and illegal cryptocurrency uses.
Within the year, legislation is expected to be implemented that will require cryptocurrency investors to pay capital gains tax as well.