Crypto

Getting rich from the crypto rally? Here's how to lock in gains and avoid a crash.

Published

2 hours ago

November 28, 2024

Press Room

Getting rich from the crypto rally? Here's how to lock in gains and avoid a crash.

Bitcoin approached $100,000 as crypto markets surged after Trump’s election victory.
But crypto is a volatile and risky asset class.
Taking profits, setting stop-losses, and diversifying into other assets are ways to reduce risk.

Christmas came early for crypto investors.

Ever since Donald Trump’s victory in the presidential election, cryptocurrency markets have been ebullient. Bitcoin, the crypto poster child, has continuously hit new highs this month, sending its price within striking distance of $100,000.

If you’ve been lucky enough to see some of these returns, you might also be worried about an impending crash, as crypto prices tend to be volatile.

While it’s common in crypto circles to glorify “HODLing” or “holding on for dear life” and resist the urge to sell your positions, this can prove to be an imprudent strategy.

Take the story of Glauber Contessoto, for example. The 37-year-old crypto trader became a Dogecoin millionaire in 2021 after his initial $250,000 investment in Dogecoin ballooned in just three months. Then things turned south.

“At the very top, my Dogecoin was worth $3 million. And then after that, the bear market came, and crypto in general dipped down,” Contesso told Business Insider in an interview. “I saw my portfolio go from $3 million all the way back down to about $200,000.”

With crypto assets enjoying another rally, Contessoto says he plans to approach things differently this time, taking profits earlier and diversifying. These are common strategies for investors to lock in gains and reduce the risk of losing their money if prices crash.

Here are some ways experts recommend reducing risks after a big run-up.

Profit-taking strategies

First, have a plan for getting out of an asset.

It’s important to have an exit strategy to minimize potential losses, especially with a risky asset class such as cryptocurrency. According to Fidelity Investments, it’s never too early to start thinking about one. While an exit strategy will be tailored to individual investor risk tolerance and preference, there are a few general guidelines.

When it comes to realizing gains, have a rough idea of how much money you want to make from your cryptocurrency investment, according to the cryptocurrency platform Digital Surge. The best way to realize gains is to start taking profits incrementally once your asset has appreciated to a certain level. For example, you could follow a rule such as taking 5% of profits for every 25% increase in price.

Don’t underestimate how volatile the crypto market is. One common strategy among crypto investors who have seen significant price appreciation is to at least take profits in the amount of your initial investment.

Set up stop-losses

Nobody likes to think about losing money, but having a plan for when your investment isn’t performing well is important for good portfolio management.

Consider setting up a stop-loss to automatically cash out of your position if your cryptocurrency falls below a certain price, saving you from the hassle of constantly monitoring the price of your crypto assets. These can be a fixed price or can trail your investment’s price gains by a certain percentage amount.

Diversify

Your investing strategy will depend on your risk tolerance, but one way to lower downside risk is to spread your money across a number of assets. Contessoto has his entire portfolio in various cryptocurrencies, but even that is a very risky approach. Cannon doesn’t advise following in his footsteps: “Even if you’re a 100% believer, just having your entire net worth in one asset class is risky.”

“If they have their entire net worth tied up in cryptocurrency, I believe that they should diversify,” Cannon added. He suggests stock-market index funds as a starting point to derisk a cryptocurrency-heavy portfolio.

Especially with meme coins like Dogecoin, seemingly arbitrary events can trigger massive swings in cryptocurrency prices, making diversification all the more necessary. In 2021, the Dogecoin rally was fueled largely in part by Elon Musk’s tweets supporting the cryptocurrency. And recently, Dogecoin spiked 15% after news broke of Elon Musk’s appointment as co-head of the Department of Government Efficiency.

At the end of the day, Contessoto embraces the volatility that comes with investing in Dogecoin and other meme coins. After all, it’s pretty unlikely that you’ll be able to quadruple your initial investment and become a millionaire in just a few months if you buy a more traditional, stable asset.

Don’t take Contessoto’s strategy as financial advice, though. It’s easy to glamorize the success stories, but there’s no doubt that investing in cryptocurrency is risky — especially when it comes to meme coins.

“These things are super high risk,” Contessoto said. “They hit and you make life-changing money, but when they don’t, you lose everything.”

Check out Business Insider’s picks for the best cryptocurrency exchanges

Click to comment

Crypto

The Life of Pi Network – FAQs and Everything Else You Want To Know

Published

10 hours ago

November 28, 2024

Press Room

The Life of Pi Network – FAQs and Everything Else You Want To Know

Everybody wants a piece of the pie – the Pi Network, that is. This decentralized cryptocurrency project, which was developed by a team of Stanford graduates in 2019, allows users to mine crypto on their very smartphones.

The objective of the mobile-first concept is to make crypto more accessible and appealing to the masses, especially a broader audience that is new to the blockchain world.

While the idea to democratize currency sounds exciting, how do you go about doing that? Are you eligible? Are there any risks? What do you do with your Pi coins? This article attempts to answer every question you have about this hot topic, and then some.

What is the Pi Network “Mainnet” we keep hearing about?

The Pi Network is a cryptocurrency project that allows users like you to mine digital currency via a smartphone app. Mainnet, which stands for “Main Network”, basically facilitates real cryptocurrency transactions. It enables users to store, receive, and send digital assets on a decentralized and secure network. The launch of the Pi Network Mainnet, which will facilitate transactions on the Pi Network, is expected to happen by the end of 2024, hence the anticipation.

What is the difference between Pi coins, tokens, and IOUs?

The Pi Network has garnered a substantial user base around the world, aptly called “Pioneers”, who have been accumulating “Pi coins” by engaging with the app. These “Pi coins” are the actual digital network currency that is not yet fully accessible or transferable as the Mainnet has not launched. Due to such strong interest in the network, Pi IOUs, often used interchangeably with Pi tokens or Pi IOU tokens, emerged as a more generic representation of the currency.

They are not real Pi coins, but rather speculative or placeholder assets representing a promise by certain exchanges that when the Mainnet launches, they can be swapped for actual Pi coins. Essentially, users are speculating on the future value of Pi before it is officially available, operating as a futures contract of sorts.

So, how do I get the Pi coins or Pi IOU tokens?

The only way to obtain Pi coins is to “mine” them via the Pi Network app on your smartphone and actively participate in the network during this development stage. The app is free to download and use. So, while there are no costs involved per se, the coins cannot be exchanged for any other currency or commodity currently. Hence, the current “value” of any coins that one “mines” is zero.

However, you can buy and trade the Pi IOU tokens on three centralized crypto exchanges currently, namely CoinW, HTX, and BitMart, with the current value fluctuating wildly between USD 60 and 90 in just the last week.

Why am I hearing about KYC in the Pi Network?

When we speak about actively participating in the Pi Network’s current development phase, it involves more than just mining coins. If you want your coins to be worth anything when the Mainnet launches, you need to complete the Pi Network KYC (Know Your Customer) verification.

For obvious reasons, this process requires the applicant to fulfill certain criteria as well as produce a few legal documents. Besides being 18 years or older, applicants need to have original copies of government-issued IDs, like a national ID, driving license, or passport (recommended), as they will be asked to capture pictures of the ID. Moreover, they also need to do a liveliness check via their phone’s camera to match their ID.

Last but not least, they need to have mined Pi coins for a minimum of 30 days, not necessarily consecutively, to apply for this KYC verification. Most importantly, people should note that while the network is open to everyone, the availability, requirements, and eligibility could differ according to location or country. This KYC verification process will allow users to transfer their minted Pi Coins to the Mainnet and allow them to perform transactions using the Pi coins.

Is Pi IOU Worth the Investment?

With the imminent Mainnet launch, the prices of the Pi IOUs have skyrocketed, it presents itself as an exciting opportunity for sure – albeit without any actual coins in hand. However, while everyone is itching to get in on the action, investing in them comes with notable risks and remains highly speculative. Not only are the tokens not guaranteed to maintain or gain value post-launch, but also conversion policies could vary between exchanges.

What’s more, the Pi tokens are currently available only on select platforms, so investors need to stay updated on everything about the Pi Network and trade cautiously.

Crypto

Why Cryptocurrency Is Back in the Art Market

Published

18 hours ago

November 27, 2024

Press Room

Art Market

Arun Kakar

Maurizio Cattelan, Comedian, 2019. Courtesy of Sotheby’s.

It may not have been the most expensive sale from last week’s marquee slate of auctions in New York, but there was no question that Maurizio Cattelan’s Comedian (2019) was the most talked-about lot of the week.

The work, a banana duct-taped to a wall, sold for $6.2 million at Sotheby’s, including fees, well above its $1 million–$1.5 million estimate. But the sale was also notable for another reason: Sotheby’s confirmed that the winning bidder, cryptocurrency entrepreneur Justin Sun, would pay in cryptocurrency.

The sale was part of a growing trend that’s been gathering steam once again in the art world: the growth in prominence of cryptocurrencies. Museum acquisitions, new collectors, and even a meme coin have all made their way into art world headlines in recent months, sparking discussion about the role of these tokens in the market.

Sun, in speaking about the sale, recognized its significance as a case study of how the crypto community could be involved in the conversation around artworks, particularly those with viral potential online. “This is not just an artwork; it represents a cultural phenomenon that bridges the worlds of art, memes, and the cryptocurrency community,” said Sun. “I believe this piece will inspire more thought and discussion in the future and will become a part of history.”

Cryptocurrencies in the art market

The sale of Comedian in crypto has shocked corners of the art world but comes as less of a surprise to others.

“Cryptocurrency wealth is now encroaching on spaces once dominated by traditional collectors and has become hard for the art world to ignore,” said Alejandro Cartagena, co-founder of Fellowship, a gallery specializing in human-machine collaboration. “Crypto entrepreneurs are bringing new energy to the art world, challenging its established hierarchies and expanding its horizons in an exciting new dynamic.”

While they have been around since the creation of Bitcoin in 2009, cryptocurrencies first entered the art market mainstream in 2021 when they gained a huge rise in public popularity. This came mainly in the growth of non-fungible tokens (NFTs), unique digital identifiers that use blockchain technology to certify ownership of artworks, along with other assets. While NFTs are distinct from cryptocurrencies, both rely on blockchain technology and are associated with each other.

While the fervor around the NFT market has cooled since they initially burst onto the market, demand for this type of work is, like other cryptocurrencies, rallying towards the end of 2024. According to MSN, the NFT market is on track to close November with “strong momentum,” following an October where there was $356 million in sales volume—an 18% increase from September.

“Interest in cryptocurrencies within the art market is growing, although not as fervently as during the crypto boom of 2020–21,” said Stefanie De Regel, head of development for digital art platform TAEX. “This steady growth reflects the evolving integration of blockchain technology and the art world, driven by opportunities…such as NFTs, and innovative platforms for creative expression.”

Why cryptocurrencies are surging

The frenzy around the Cattelan sale underscored the fact that crypto is back in a big way, more than ever following the reelection of Donald Trump in the U.S. Though most cryptocurrencies slumped in the “crypto winter” of 2022 (a sign of their essential volatility), they are now on the rise again.

Earlier this month, the global crypto market reached a $3.2 trillion high, spurred on by a belief that the incoming president will enact crypto-friendly regulatory policies. This was boosted further last week when Trump nominated the pro-crypto hedge fund manager Scott Bessent as his treasury secretary, which caused Bitcoin to surge to a new all-time high.

There are other cultural signals for crypto market watchers, showing that the incoming administration intends to acknowledge its importance. Another Trump appointment, Elon Musk, will co-lead a newly set-up “Department of Governmental Efficiency,” (abbreviated to DOGE, likely in a sly reference to the meme coin Dogecoin). Musk is a crypto enthusiast, and once vowed to send Dogecoin “to the moon,” a popular slang used in crypto circles to express conviction. The cryptocurrency with the new department’s name has surged to a three-year high this month.

What is a memecoin?

Bitcoin isn’t the only cryptocurrency on the market: There are thousands more blockchain-backed currencies and tokens that are traded online. And the Cattelan sale also led to a bull run of its own. The cryptocurrency $BAN or Comedian is unaffiliated with Sotheby’s but describes itself as “inspired by Maurizio Cattelan’s artwork, featuring a banana taped to a wall.” The coin was picked up in the chatter of speculators online, who began trading it at high volumes. The meme coin (a term given to cryptocurrencies that are typically inspired by internet and cultural trends) saw its market cap—the total value of all its coins—surge to $300 million. It is now listed on major crypto exchanges such as Binance and Bybit—a significant sign of legitimacy in the crypto world.

Later, it was revealed that Michael Bouhanna, head of digital art and NFTs at Sotheby’s, created the cryptocurrency $BAN as what he called a “spontaneous project and a personal hobby” inspired by the “conceptual questioning of value,” which Comedian as an artwork represents.

As the price began to climb and the coin gained traction in crypto circles, Bouhanna was accused on social media of “insider trading.” Bouhanna took to X to deny accusations that he’d made $1 million in profit, noting that he did not “promote $BAN or encourage anyone to buy it.”

Cryptocurrency and museums

Yatreda ያጥሬዳ, Abyssinian Queen, 2024. Courtesy of Yatreda ያጥሬዳ.

Institutional support for NFTs has also become more widespread. NFTs are in the collections of the Centre Pompidou and LACMA. Last week, the Toledo Museum of Art in Ohio became the first major museum to acquire artwork using cryptocurrency when it purchased the digital artwork Abyssinian Queen (2024) by the Ethiopian artist collective Yatreda ያጥሬዳ. The purchase was made using USDC, a stable coin (a cryptocurrency that is pegged to a traditional, or “fiat” currency like USD or euro).

The decision to purchase the work, explained Adam Levine, the museum’s president, director, and CEO, was to “respect and align with the practices of the artist collective we were working with.”

“Just as we would pay in euros when purchasing from a French gallery or in pounds when dealing with an English auction house, it felt appropriate to transact in the preferred currency of Yatreda ያጥሬዳ, a web3 artist collective,” he told Artsy.

Where next for cryptocurrencies in the art market?

Comedian is unlikely to be the last headline-grabbing sale to be paid for in a blockchain-backed currency.

Cryptocurrencies are bringing new collectors into the art market with their own set of motivations, Cartagena points out. “We’re seeing a convergence of tech entrepreneurs and traditional collectors that fosters new dialogues,” he said. “We’ve also noticed that crypto collectors are less interested in singular ownership and more fascinated by shared authorship, networked systems, and ideas of co-creation. This dovetails with how artists are thinking about AI, decentralized platforms, and collaborative processes.”

This is reflected in auction sales, too. For example, Sotheby’s announced that it would accept cryptocurrency for A.I. God. Portrait of Alan Turing (2024), the first artwork to be painted by a humanoid robot. It sold for $1.08 million, far outstripping its estimate. Sales such as this are unlikely to be the last of their kind as crypto’s role in the art market becomes increasingly hard to ignore.

“Since Bitcoin’s inception only 16 years ago, the combined market capitalization of cryptocurrency globally has grown from $0 to more than $3 trillion; that value surpasses the GDP of the U.K. or France and is more than the market capitalization of any company in the world except NVIDIA and Apple,” said Levine. “Seen this way, it is hard to imagine how such value accumulation will not impact the art world.”

Arun Kakar

Arun Kakar is Artsy’s Art Market Editor.

Crypto

Japan proposes lightweight legislation for crypto intermediaries, beyond exchanges – Ledger Insights – blockchain for enterprise

Published

1 day ago

November 27, 2024

Press Room

Japan proposes lightweight legislation for crypto intermediaries, beyond exchanges – Ledger Insights – blockchain for enterprise

Japan is mulling new lightweight legislation for cryptocurrency intermediaries that are not crypto exchanges. Last week the Financial Services Agency (FSA) presented its ideas to the Financial System Council Working Group on Payment Services.

Japan was home to the Mt Gox cryptocurrency exchange that was hacked in 2011 and 2014. As a result, the country was ahead of most, introducing legislation for crypto asset exchange service providers (CAESPs) in 2017. This covers the sale and purchase of crypto, acting as a broker, managing money related to these services or providing custody. However, many so-called introducers who don’t operate crypto exchanges don’t consider themselves as CAESPs.

The FSA gave the example of a games app or self hosted wallet providing access to a third party app for crypto trading services and then switching back to the original app. In many cases, the FSA might consider the app operator is acting as an intermediary and hence it needs to register as a crypto exchange. However, it recognizes this is quite onerous if an organization is purely acting as an introducer and never touches any money.

Hence, it is considering lighter proposals that require them to register as intermediaries. The introducer would be obligated to provide information to users. They’d be subject to advertising restrictions, and potentially liable for damages if something goes wrong.

The FSA mulled how do deal with damages. Current regulations for other financial services intermediaries that are not part of a larger group require a security deposit to cover potential damages. Where the intermediary is affiliated with a cryptocurrency exchange, the damages could be borne by the exchange.