Crypto Investment Duds of 2021, and What We Can Learn from Them

2021 was going swimmingly for many crypto investors, with some showing off their new Lamborghinis they had bought as part of their success. And then December came with Bitcoin dropping as low as $40,000. This turn of events undoubtedly spooked many investors.

Likewise for Cardano investors who enjoyed a steep incline in the first 9 months of 2021, with gains of 1400% before the coin reversed its gains and took steady plummet lower.

Investing in cryptocurrencies is risky, with volatility price spikes that can knock off 10% or more of your portfolio’s value in one single day. But there are other ways to play the crypto markets without taking on such big risks.

Buying vs. Trading

When buying cryptos, you need the price of the asset to rise in order to make a profit. When it falls you lose value on your holdings. However, when trading cryptos as a derivative you have the option to trade in both rising and falling markets. Crypto derivatives are contracts on the asset, so rather than purchasing the underlying asset itself, you are speculating on the price of the asset’s movement and you make money based on the price differentials.

When buying assets like Bitcoin you also need to deal with the hassles of storing it. There are many clever scammers out there just looking to take away your holdings, in a perpetual game of cat and mouse. One unlucky investor who had decided to withdraw his profit of $475,000 based on 84 bitcoins at that time, fell foul to a phishing scam. He pressed the wrong link which sent him to a fraudulent phishing site, which looked exactly like the real site, and lost the vast majority of his holdings in one fell swoop.

There Must Be a Better Way?

Many investors are moving away from the mainstream cryptos, to those linked to the metaverse, gaming and decentralized finance. The trick to finding the right token to invest in is to look at the utility behind the token. For instance, if a platform or project releasing a token already has hundreds of thousands of users, it’s a solid bet that the price of the native token will rise in the longer term. Utility and functionality is key to finding the right token to invest in. Just look at Solana’s amazing performance over the last year!

Some consider derivatives trading to be a much better way to gain exposure to cryptocurrencies, without having to buy the assets and to deal with hassles like storage. Platforms like SynFutures allow traders to create their own markets, by collaterizing their assets and synthesizing pretty much anything into a token.

Another solution has evolved from one innovative platform that has come up with a way for NFT holders to gain extra income from their NFTs and other tokens without having to part with them. Drops allows traders to use their assets as collateral against loans or yield farming Users can put their idle crypto tokens to work, including their NFTs by putting them in loan vaults. From here, they can generate yield on their assets, and even take loans out for lending their assets, which they later get back.

The Bottom Line

• Invest in tokens with real utility behind them.
• Consider trading derivatives which allow you to trade in falling markets too
• Look into yield farming, staking and loans for putting your idle tokens to work