Bitcoin has become the most valuable and popular investment asset for many people in 2021. Many factors are supporting the surge in demand for Bitcoin. Some of these factors are as follows:
- The popularity of Bitcoin has risen due to the COVID-19 pandemic. Since everyone is inside their home during lockdown and stocks are not performing well, investors shifted their attention towards Bitcoin.
- Bitcoin crossed the psychological resistance of $19,783 on 17 Dec 2020 and now trading around $34,400 at the time of writing this article.
- Several billionaire investors predict that Bitcoin will surpass the $50,000 mark easily in 2021.
Well, many other factors influenced small crypto investors to invest in digital currencies. However, you must be aware of the fraudulent activities that seep into the crypto trade market during the lockdown.
Fraudulent Activities in the Crypto Market
If you are looking to invest in Bitcoin, you must stay away from the fraudulent activities that are going around in the crypto market. Apart from that, you can check out bitcoin revolution to learn about trading and investing strategies.
The Rise in Fake Crypto Exchanges
Since everybody is at home during the lockdown, fraudsters and money launderers were building fake crypto exchanges. They are targeting people who are new to the crypto space and don’t know much about the security threats and risks involved in the crypto market.
If you are planning to put your money in virtual currencies, you must be vigilant about the authenticity of the crypto exchanges. You should check the reviews, ratings, and testimonials of the crypto exchanges before you select them. Moreover, you can conduct background research of the team involved in creating the trading platform.
Stay Away from Less Credible Altcoins
With the rise in demand for some Altcoins during the lockdown, many retail investors are looking for the next Bitcoin. It means that many retail investors look for cheap Altcoins and predict that it can perform like Bitcoin. However, there is a huge risk, and it can take away your capital from your crypto wallet.
With the freedom to create their own digital currencies, many people are offering cryptocurrencies that are not backed by any real-world usage. So, you can avoid such altcoins by reading their whitepaper and websites thoroughly.
Crypto mining also allows you to earn cryptocurrencies through solving computation problems. These problems are typically Bitcoin transactions, and you need to solve the blocks to earn a reward. However, the main concern with crypto mining is you need high-processing devices.
Therefore, small crypto miners want to be a part of a mining pool or cloud mining. It allows you to use your computational power with others, and you get your portion of rewards proportionately. One way to identify such fake cloud mining is by looking at their lofty promises. So, always be careful while you are signing up for a mining pool.
Pump and Dump Schemes
One of the trickiest ways that group scammers make you a fool is by buying a new Altcoin and increasing its price. When you think that it’s an excellent altcoin to invest in and put your money in fear of missing out, the group scammers sell-off their holdings. It’s called the pump and dump schemes.
Although it’s illegal in the stock market, there are no clear guidelines for the crypto market. So, you should stay away from such unreliable and less credible altcoins that may be showing fake uptrends in the crypto market.
Hopefully, the above information has given you some insights into fraudulent activities that seeped into the crypto market during the lockdown. So, leverage this guide to stay away from these scams, fake promises, and schemes to protect your money. One last thing; taking more risk doesn’t guarantee you high returns. Please share your take on this article in the comments section.