The current coronavirus pandemic has resulted in global economic recessions creating an alarm to most of the population of what lies ahead. Financial experts have warned us that we are heading towards the deepest recession on record, which can be as severe as the Great Depression recorded in history.
One of the most affected by this current crisis is the working class. In the United States, more than 38 million people have filed for unemployment claims across the country because of the coronavirus’s impact. This number is recorded only in nine weeks and has been increasing ever since. The COVID-19 crisis will affect almost 200 million full-time workers, according to the International Labor Organization.
Due to the unexpected crisis, millions of people are now left with no choice but to find other means of living to replace their lost income source. Most people have resorted to looking for replacement jobs online. Some have explored the investment market to help keep them afloat during trying times. Thankfully, there are different strategies that investors can take advantage of when they have limited knowledge in the investment space.
Investing in Digital Assets
One strategy that new investors can employ is investing in digital assets. It is known to be a sustainable investment instrument, even during a recession. Even though markets are volatile during economic downturns, digital assets can offer access to liquidity. When partnered with the right strategy, anyone can quickly learn how to trade this instrument. Some platforms provide access to this instrument without requiring advanced technical knowledge.
According to a report by Singapore Management University, “Alternative investments are widely seen in portfolio management presently and include commodities, real estate, private equity (PE), hedge funds, and others, such as artworks. Typically, alternative investments have a lower historical correlation to conventional asset classes, such as stocks, bonds, and cash equivalents, and thus provide good diversification to the portfolio.”
Digital assets are considered to be alternative investments that offer new opportunities for new and experienced investors. It is also one of the most popular assets to invest in, especially for new investors, because it does not require steep knowledge of the market. What is crucial is that investors use the right strategy.
Arbitrage Used as an Investment Strategy
According to a report by Prance Gold Holdings, “the digital asset market is currently at US$ 268 billion, with an all-time high of US$ 744 billion in 2018. Major drivers for market growth are the transparency of distributed ledger technology, high remittances in developing countries, high cost of cross-border remittance, fluctuations in monetary regulations, and growth in venture capital investments. Now, trading and investments also drive the growth of the market.”
Because of the growing numbers of the digital assets market, there are more opportunities available for investors. With the use of proper strategy, any investors can earn profit from this asset class. For example, investors can take advantage of arbitrage trading. Arbitrage is a form of trading that takes advantage of price discrepancies of the same cryptocurrency from different exchanges. These discrepancies occur when multiple exchanges are differently pricing a coin.
According to the same report,” Arbitrage trading works due to existing market efficiencies in the crypto market. The primary factors behind these inefficiencies are the supply and demand, and a change in either of them can affect the coin’s price. This strategy is considered risk-free. It focuses on spotting the differences in price that can occur when there are discrepancies in supply and demand levels across all exchanges.”
Traders can use an automated trading system, such as Prance Gold, as part of an arbitrage trading. Automated trading systems rely on algorithms to spot price differentials on different exchanges. It allows traders to jump on the arbitrage opportunity before it becomes common knowledge, and the market adjusts the inefficiencies.
Due to the increasing unemployment rate, most of the population is looking for creative ways to create an alternative income stream. Thankfully, investments are now more accessible to everyone and can have lucrative returns when used with the right strategy. New investors should always be careful when investing to ensure that they will not incur any unnecessary losses during the process.
Image credit: Pixabay