The Best Places to Put Money After The Crypto Crash
Widespread cryptocurrency crashes are spreading across mainstream media these days. Millions of people own cryptocurrencies, and the value of cryptocurrencies is rapidly declining.
Many cryptocurrency investors hope that the value of their investments will rise again in the future. But many others have been burned by the cryptocurrency crash and are looking for other investment avenues to generate profitable returns.
There is evidence that the stock market could become a viable alternative to the cryptocurrency market. Not only does the stock market have a proven track record of success spanning centuries, trading results from the perspective of stock market experts show that stock options in particular can offer a way to increase profitability.
How bad is The Crypto Crash?
Imagine a plane that lost its engine and crashed out of control out of the sky. Here's what most cryptocurrency prices looked like in the last year.
Bitcoin, the most famous and long-standing cryptocurrency, has fallen more than 70% from its all-time high last November.
Cryptocurrency has taken a big hit recently with the collapse of the FTX crypto exchange. FTX was once so big, its founder was one of the 10 youngest billionaires in the world. It has now gone bankrupt with a dramatic destruction of investor wealth.
The value of cryptocurrencies is rapidly declining, and many cryptocurrency investors are wondering what to do with the money left over from investing in cryptocurrencies.
Will the crypto value come back?
One possibility faced by crypto investors is to simply wait and see if the value of the cryptocurrency recovers.
There is no way to know what the value of cryptocurrencies will be in the future. One particular challenge is that cryptocurrencies are a relatively new investment vehicle.
The crypto market was formed just over a decade ago. Due to its short history, there are few clues as to whether it can recover from this kind of crash. Bitcoin has seen sharp declines in value before, but some economists see this one as fundamentally different from previous ones.
This means that maintaining a cryptocurrency investment may involve additional risks.
Cryptocurrency prices in recent years reflect signs of a market bubble. In some ways, it's like the bubble in the Dutch tulip bulb market in the mid-1600s, when speculation drove tulip values to extremes.
In that case, some tulip bulbs sold for six times the average person's annual income. Looking back, it's shocking that someone would have paid so much to buy just one tulip. However, market speculation was driving up prices at the time, and the value of tulips became more based on emotion and speculation than on the actual tulips themselves.
Ciphers may be similar in some respects. There are no physical products or entities. Demand for cryptocurrencies had risen to a frenetic pitch, perhaps akin to the tulip bulb frenzy, given that our barbers and mothers started talking about it.
Now that the bubble has burst, does that mean that cryptocurrencies will be crushed forever and never regain their value? No, not necessarily. Clearly, though, there are some indications that cryptocurrencies need a more fundamental value to sustain the prices we saw when they peaked late last year.
One of the things crypto has is a track record of volatility over the decade of its existence. Future price spikes are therefore not out of the question, but whether the cryptocurrency market can sustain potential future price increases is up for debate.
Ultimately, there is no way to know what the future holds for cryptocurrencies. There are many indications that investing in cryptocurrencies involves a lot of risk, but cryptocurrencies can regain their glory in the future.
If you want to avoid the risks of the cryptocurrency market but want to make a profit on your investment, the stock market may be worth considering.
The stock market may become a viable alternative
One of the things the stock market is heading towards is its long history of rising values.
In the United States, the stock market was created centuries ago. Over the last 90 years, the stock market has averaged 9.8% per year. This is a big contrast to the relatively young looking cryptocurrency market.
That's different than saying the stock market has no periods of decline. Of course, there have been many stock market crashes.
What sets them apart from the stock market is their long track record of recovering from crashes. I have recovered from every crash I have ever experienced.
There are magnets that pull up the stock market over time. There have been occasional hard times, but historically imaginary magnets have always prevailed and pushed prices higher.
Long-term trends like this can increase your chances of making a profit in the stock and cryptocurrency markets.
Many studies suggest that the "buy low, sell high" investment strategy may be a particularly effective way to make money in the stock market. The stock market has such a deep history that it is well suited to using historical price research to guide future investment decisions.
And with the stock market now nearly 20% below all-time highs, market ETFs could be a “buy low, sell high” candidate. There is no way to know if it will go down or up from here, but in the past the market has always found a way to go up eventually.
Let's say your main goal is to make sure that the value of your account is likely to increase over time and that an irreversible crash is unlikely. In that case, the stock market may be an investment option worth considering.
Can the stock market provide amplified returns?
For many who invested in crypto, the attraction was the explosive profit potential. To them, the historical average annual return of 9.8% that the stock market has achieved may not sound appealing.
One way to increase the potential for greater returns is to invest in stock options. This is a mechanism that allows stocks to be managed at a price much lower than the actual price of the stock itself.
For example, if you buy a $100 stock and it goes up $5, you get a 5% profit. But if you bought an option on that stock and it only cost you $10, it would represent a 50% return if the stock went up the same $5. This gives an idea of the potential size of the profitability options that can be offered.
It is important to note that as potential profitability increases, risk increases proportionately. If the same stock falls by more than $10, the drop could wipe out the value of the option.
Options also have an expiration date. In other words, the price change must occur before the expiration date to benefit from an increase in the stock price. This represents another element of risk associated with stock options.
Options therefore have more potential risk than stocks, which makes them similar to cryptocurrencies in terms of volatility and the potential for explosive returns.
An options picking service called Mindful Trader has a strong track record of success in options trading over the last month.
Over the past 30 days, his live trading ledger shows that his options trading has generated his 15-2 win-loss record. The value of his options account he increased by 32.7% during that period.
For crypto investors who remember making explosive profits in the past, these returns from Mindful his traders may be a reminder of his glory days. They show that options can have enough profit potential to satisfy the desires of active cryptocurrency investors.
However, there is an important caveat. Mindful Trader's trading ledger shows that not all periods are equal and some periods are unprofitable. This highlights the risks involved in options trading.
However, for crypto investors who are comfortable with risk, stock options are one of the best alternatives to cryptocurrencies and can bring explosive returns.
Conclusion About crypto crash and Investing stock market
Last year's crash was a difficult one for most cryptocurrency investors.
For those considering alternative investments, the stock market may be worth investigating. It has a remarkably long track record of profitable returns and stocks he offers mechanisms such as options to amplify those returns.
Investing is risky no matter where you have your money. Higher potential reward dials generally increase the level of risk involved with an investment.