Cryptocurrency guide: ‘tips’ when investing and where to do it

During the week ending Bitcoin’s price surpassed $30,000 for the first time in ten months, following its rise in recent weeks.

This increase occurs after the main cryptocurrencies register sharp falls, which led their investors to fear the worst.

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However, as if it were a ‘roller coaster’, Cryptocurrencies have managed to stay and even be an important alternative, after the banking crisis.

“The turmoil in the banking sector and speculation about a possible end to the cycle of rate hikes by the US Federal Reserve have boosted demand for ‘crypto’, allowing bitcoin to recover from its 60% fall last year. past”said Victoria Scholar, an analyst at Interactive Investor.

This price boost has also carried over to other cryptocurrencies such as ether and dogecoin.

Some supporters of bitcoin affirm that cryptocurrencies could be an alternative to the banking sector, recently under stress due to the bankruptcy of Silicon Valley Bank (SVB), and despite the problems in the sector, such as the bankruptcy of the FTX platform or the fall of the Terra/Luna cryptocurrency.

On whether or not it is time to invest in cryptocurrencies, Walid Koudmani, an analyst at XTB, said that “Keep in mind that the cryptocurrency market is unpredictable, so investors should remain cautious as the situation could turn around quickly.”

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The recent FTX and SVB crises reinforce the need for entities to guarantee the security of their operations and the credibility of their clients in the midst of a possible context of global recession. This refers to situations similar to the “tech bubble” of the early 2000s and the financial market crisis of 2008, in which both the financial and technological systems went through a similar situation due to a lack of control and speculative character.

According to Estefano Debernardi, Coinspaid’s director of business development for Latin America, transactions are made by first having access to a wallet, then knowing what one is going to send, then making the transaction and after confirmations from the blockchain (this depends on the network used) the funds will be visible in the wallet of the other person.

Cryptocurrency investors.

The opening in the last year of 110 Fintech, which completes 344 in the country, according to Colombia Fintech, added to the rise of technologies such as ‘blockchain’, have allowed investing in digital assets to be faster, easier and more accessible every day for all pockets.

Currently there are different risk options and alternatives that make cryptocurrency operations more secure and at the same time generate more confidence.

Although the winter that this industry went through last year, and from which its tail is still felt, added to the disappearance of FTX and the collapse of the stablecoin terra USD, caused the cryptos to fall in price, their operations at the beginning of the year have had a positive behavior and the number of transactions continues to increase.

The figures show that the fall in capitalization of digital currencies went from 2.3 billion dollars in 2021 to 843 million dollars in 2022; however, so far in 2023 there has been a rebound.

According to the data collected by the CryptoMarket platform, Bitcoin’s price rose more than 70% in the first quarter of 2023, beginning January at around $16,605 and ending March at $28,476.

As for the price of ethereum –the second crypto with the highest adoption and use in Colombia–, it presented significant movements in the first three months of 2023, trading in March at more than US$1,822, compared to the US$1,200 it registered on December 1. January.

These numbers not only show the growth of a still emerging industry in Latin America, but also confirm the interest in the use of these digital assets in countries like Colombia.

According to a recent CryptoMarket report, men, aged between 30 and 40, who currently work as investors, engineers, and financiers, are the ones who are doing the most operations in this type of asset.

According to the company, the investment in digital currencies on average moves between 500 and 1,000 dollars, and the cities where operations with cryptocurrencies are being carried out the most are Bogotá, Medellín and Cali, with percentages ranging from 12% to 39%. respectively. By gender, Men are in 84% of cases who are using cryptos most frequently, compared to women with 16%.

Of the total number of active users of this digital currency, according to a report by the consultancy Americas Market Intelligence (AMI), 82% allocate these currencies to invest and, in addition, 32% have also purchased stable cryptocurrencies or stablecoins and 23% seek to protect themselves. of inflation.

Regarding professions or trades, Investors and financiers (19%), followed by engineers (14%), merchants (9%), university students, traders and administrators (all with 5%), are the ones who currently carry out the most operations with cryptocurrencies in Colombia.

Housewives are also gradually entering this market, seeing how this type of asset has become a good savings and investment alternative (2%).

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For generations, millennials, who represent more than 50% of the purchasing power in the country, are the ones who in the highest proportion (49%) are using crypto more in their daily lives; and the centennials continue (21%), young people between 20 and 30 years old, a generation that is estimated to present a growth in their income of more than 140% in the next 5 years, representing $33 trillion dollars in 2030 and reaching 27% of global revenue, according to Central Generational Kinetics in the United States.

According to Andrés Gómez, CEO of CryptoMarket in Colombia, 70% of cryptocurrency users in the country today belong to these two age groups.

“This tells us that it is the new generations who are coming to change the economy, how they relate to it and what types of assets they are using to invest.”, he added.

By areas of the country, Bogotá (39%) stands out as the destination with the highest number of operations in this type of currency, followed by Antioquía (21%), Valle del Cauca (12%), Atlántico (7%) and Bolívar (5%).

Regarding the investment amounts, 33% of Colombians prefer to invest less than 500 dollars in cryptocurrencies, 25% allocate between 500 and 1,000 dollars and finally 25% of people with greater purchasing power invest between 1,000 and more than $2,000 in these currencies.

There is 17% of citizens who cannot be placed in a specific range, because they very occasionally allocate resources to these assets and it is not possible to know the exact amount of their investment.

Gómez concludes that the crypto industry will have great activity in 2023. “It is always said that cryptocurrencies are speculative. However, we see that this trend is gradually being displaced by greater uses in the real economy, mainly in the remittance industry, transfers between companies and individuals, retail payments and electronic commerce”said.

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