Brazilian investors are traditionally more conservative and choose to keep their savings in savings or fixed income. Even so, little by little, bolder application options are gaining ground in the country. This is the case of crypto assets, which have been attracting the attention of those interested in diversifying their portfolio and, in this way, encouraging financial entities to create solutions for this public.
“If before they were an option for few, now it is enough to have an account in an exchange to be able to invest in one of the various digital assets available in the market.”, says Edson Teixer, managing partner of IRKO in Rio de Janeiro and professor at IBMEC-RJ
He cites the offer of services related to the crypto universe of Nubank, BTG Pactual, 99Pay, Mercado Pago, XP Investimentos, in which it is possible invest in cryptocurrencies such as Bitcoin or Ethereum, in some cases from R$ 1 (a Brazilian real).
The growth of interest in these products is reflected in the segment numbers. According to the Global Crypto Adoption Index 2022 report by blockchain analytics firm Chainalysis, Brazil is now the seventh largest global market for cryptocurrency adoption, and the leader in Latin America. Compared to last year’s report, the country climbed seven positions.
In July, Nubank announced that it had reached one million customers on the crypto asset platform, just three weeks after the tool became available to its entire customer base.
Teixer points out that investing directly in digital assets through exchanges is not the only way to enter the world of cryptocurrencies today. It is also possible to invest in digital assets through ETFs (exchange-traded index funds) and mutual funds.
However, although they are a growing market, crypto asset applications are still not regulated in Brazil, he says. That’s why, Before investing, you need to take some precautions. Below, the expert gives advice for those who want to take the first steps:
1- Who are crypto assets suitable for?
Investing in cryptocurrencies is only suitable for people with a risk-prone profile. “Virtual assets are very liquid, but the volatility is immense. Some of them can vary up to 30% in a single day, a very high percentage for those with a more conservative profile.”, explains Teixer.
To give you an idea, In August alone, Bitcoin, the most common cryptocurrency and one of the first to gain space worldwide, accumulated a devaluation of 14.16%. Less popular, Internet Computer (ICP) posted losses of 30.7% in the same period.
2 – How to invest
Mainly because it is an unregulated modality, it is essential to choose wisely where to trade crypto assets. The expert recalls that, nowadays, scams are common involving large amounts and the purchase of digital assets. Therefore, the suggestion is to choose funds or brokers linked to large companies, with open capital or with a consolidated reputation in the financial market.
“EFTs are funds that track the indices of cryptocurrencies or other assets, such as gold and commodities. It is a safe way to invest because each fund has an administrator responsible for making investments with rules and criteria according to predetermined objectives. In addition, the fund itself diversifies its portfolio to provide more security and reduce losses. However, this is a paid service”, explains Teixer.
The other option is the exchange (brokers), which allows the person to directly buy the assets of interest. Nevertheless, the modality is only indicated for those who are already familiar with crypto assets, since there is no expert or council involved. The advantage here, he says, is that the fees involved are negligible.
3 – How much time to invest
Determining the period between the purchase and sale of crypto assets depends on the investor’s profile and strategy. Due to liquidity and volatility, these are assets that can be quickly sold if the need arises.but this does not necessarily have to be the strategy.
“Currently, investing in crypto assets has a very specific characteristic. Many people take advantage of the opportunities that arise as new cryptocurrencies are launched, buying and selling quickly, that is, it has been a very short-term type of investment”, analyzes the managing partner of IRKO.
However, he states that it is possible to make longer-term investments in the crypto universe, such as in the stock market, through ETFs. To do this, however, it is necessary to understand the risks and limit exposure to assets, depending on the profile of each investor.
Disclaimer: The information and/or opinions expressed in this article do not necessarily represent the views or editorial line of Cointelegraph. The information set forth herein should not be taken as financial advice or investment recommendation. All investment and commercial movement involve risks and it is the responsibility of each person to do their due research before making an investment decision.
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Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.