The Securities and Exchange Commission (SEC) is a national regulatory agency responsible for supervising the corporate sector, participants in the capital markets, securities and investment instruments, and investors. This creates varying impacts on various aspects of the economy
Let’s look at how the SEC’s fight against inflation affects the crypto industry.
Will the SEC Change Its Strategy for Lowering Inflation?
The Jumpstart Our Business Startups (JOBS) Act mandates the SEC to make inflation adjustments to its rules after every five years. The last adjustments were made in 2017, and new ones were due in 2022. According to a press release by SEC, the new thresholds have already been made and become effective after publication in the Federal Register.
Final rules regarding inflation adjustments were adopted as required by the JOBS Act. The amendments in 2022 increased the annual gross revenue from $1,070,000,000 to $1,235,000,000. As part of its mandates, the SEC is also responsible for adjusting the dollar amounts regarding the crowdfunding exception for inflation. The offering limit for Regulation Crowdfunding wasn’t adjusted and remained at $5,000,000.
Crypto Prices During Inflation
Unlike regular currency, cryptocurrency doesn’t respond to inflationary pressure. This makes cryptos an excellent counter-inflationary asset. As the value of money drops, that of cryptocurrency increases. This is because people usually seek better assets for storing value when regular currency inflates. Bitcoin or other cryptos traded on platforms such as Bitiq preserve spending power and value when the dollar weakens.
As inflation rises, the US Federal Reserve and major central banks are inclined to continue raising interest rates. These bodies may also tighten monetary policies to curb the increase in prices. It may lead to a fall in the price of various assets, including cryptocurrencies.
Cryptos are said to be an excellent hedge against inflation although they have started moving in tandem with other major assets, such as stocks. Central governments and banks take measures to combat inflation which may adversely affect various assets, making them lose value.
This has started affecting cryptos, although some, such as Bitcoin, have features that make them immune to inflation, including ease of transfer, scarcity, and immunity from direct influence by governments.
Holding or Trading – What to Choose Now?
Trading involves buying and selling financial assets regularly while holding is keeping the assets purchased until prices increase over time. If you’re considering what to choose now, let’s shed more light on each.
It allows for establishing an investment strategy with clear entry and exit which offers more control over decision-making. A sound investment strategy allows for making more money since you’re likely to buy and sell assets with a relatively large investment in a short period.
Making about 3% while holding requires waiting for years, while day trading may give you a 1% return on investment in a few hours. Trading allows market predictions using appropriate tools to understand the market. However, you may make a loss if you don’t plan well.
Investors must hold assets for a long time to make considerable profits. Holding doesn’t have commissions or probability loss as trading. However, there’s a risk of making a loss while holding resulting from inflation. It also limits the diversification of your portfolio and deprives you of a chance to use appropriate tools to manage risk and choose the right assets.
Overall, trading is more profitable if you’re willing to take the risk. Some assets are more profitable for holding, while others give good profits in a few hours if you trade correctly. Therefore, investing in both strategies is a smart idea.
What Do Crypto Enthusiasts Say?
According to Analytics insight, new cryptocurrencies are set to explode in 2023. The market is currently valued at $1.5 trillion and is expected to continue expanding, creating the potential for investors to gain.
When planning to join the market, consider cryptos such as Ethereum, Solana, Gala, Cardano, and Ripple for their high-profit potential. Ethereum is a wonderful deflationary token in the smart contract industry that contributes to its growth potential.
Cryptocurrency is a wonderful hedge against inflation with various options, including Bitcoin and Ethereum. Features such as freedom from government interference, scarcity, and ease of transfer make cryptos wonderful assets for trading or holding.