This crypto gained 270% in 2021. Should you buy?

[ad_1]

Cryptocurrency prices have been on a roller coaster ride in 2021, and the year is barely in its second half.

Uniswap (UNI) started the year at $ 5.17. According to data from CoinMarketCap, it then peaked at $ 44.97 on May 3 and was priced at $ 19.25 at the time of this writing. That’s an increase of over 270% since Jan. 1, even taking into account the recent drop.

To put it in context, here’s a look at how the other coins have evolved so far this year:

Bitcoin and Ethereum are the biggest coins by market cap and have huge influence in the market. SushiSwap and 1inch are key competitors of Uniswap.

It should also be said that if you had bought any of these at their highs, you would be looking at overall losses rather than gains.

One Email a Day Could Save You Thousands

Expert tips and tricks delivered straight to your inbox that could help save you thousands of dollars. Register now for free access to our Personal Finance Boot Camp.

By submitting your email address, you consent to our sending you money advice as well as products and services which we believe may be of interest to you. You can unsubscribe anytime. Please read our privacy statement and terms and conditions.

What does Uniswap do?

UNI is a governance token on the decentralized exchange Uniswap (DEX). Decentralized exchanges allow you to buy and sell cryptocurrencies directly without intermediaries. In contrast, centralized cryptocurrency exchanges act as intermediaries to facilitate transactions.

The biggest problem DEXs currently face is the potential for increased regulation. DEXs are anonymous, so you don’t need to provide any personal details to be able to trade – once you’ve connected your wallet, you’re good to go.

Authorities fear that anonymous trading apps facilitate money laundering or terrorist financing. This is why most centralized exchanges require proof of identity before you can trade. This is also the reason why the EU recently proposed a ban on anonymous commercial services.

Uniswap is one of the few US-based DEXs, and it looks like it’s trying to stay on the safe side of regulators.

For example, Uniswap recently announced that it would stop trading certain tokens on its platform in response to what it called the “changing regulatory landscape”. The move came after regulators met with decentralized exchanges, including Uniswap, last month to discuss concerns about certain cryptocurrency projects.

But we don’t yet know what form the increase in US regulation will take. Uniswap’s decision shows that it wants to stay one step ahead of regulatory requirements. But restricting access to a few tokens is one thing. If it is necessary to verify the personal data of traders, that could be another story.

Should we buy?

Here are some questions to consider before purchasing UNI.

Are you hoping for another 270% increase over the next six months?

Cryptocurrency investments are unpredictable and we don’t know how this market will play out. As such, it is not a good plan to invest in the hope of a big leap before the end of the year. It makes more sense to look for investments that you think will perform well over the long term – that way you don’t have to worry as much about day-to-day price fluctuations.

Do you have strong emergency and retirement funds?

If you want to invest money in cryptocurrency, make sure you cover your financial bases first. The first rule of crypto investing is to only spend the money you can afford to lose. So, before purchasing digital coins, it’s a good idea to have three to six months of living expenses set aside in your emergency fund. And to be up to date with your retirement contributions.

Do you know about DEX and have you researched Uniswap?

The second rule of cryptocurrency is to do your own research. Read the white paper, take a look at the direction of the business, and work to understand the competition. Before purchasing UNI, you should understand how DEXs work and the potential impact of the new regulations, and be comfortable with how the business is run.

Do you have a plan for your UNI to work for you?

This is not essential, but if you are considering investing in Uniswap, consider how you might earn interest on your assets. For example, Uniswap uses something called liquidity pools to facilitate trading. Investors can earn a percentage of the trading fees by contributing to these pools. But it’s not straightforward, so if you’re interested you’ll want to do your research first.

Uniswap is one of the most established DEXs and currently enjoys being based in the United States. It has performed better than its competitors this year, but it is also possible that it will be more affected by changes in US regulations. Simply put, there are a lot of factors to consider before purchasing UNI.

[ad_2]