Why NFTs can be a riskier investment than cryptocurrencies, report
Cointelegraph
Published Oct 01, 2021 09:53AM ET
Updated Oct 01, 2021 11:40AM ET
Investors who survived the 2008 financial crisis understand the importance of liquidity. When an economic recession starts, deflationary pressure hits the market, and buyers disappear. Sellers frantically try to sell assets before their prices drop further, but buyers want to de-risk and go into safe-haven assets, such as treasury bonds and money market funds.
The lack of liquidity associated with nonfungible assets is the one reason why investors may think they are riskier than cryptocurrencies. When an investor wants to sell Bitcoin (BTC), they can easily sell to an order book of buyers at various price points. If a seller doesn’t sell their Bitcoin today, they can easily come back tomorrow and part ways with their Bitcoin in favor of willing buyers.
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Written By: Cointelegraph
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