In short and most important, I do not trade cryptocurrencies because I am profitable and consistent in trading index and stock options (check my options trading account). This is the number one reason!

But there are others that make me not feel confident trading cryptocurrencies, like:
. Cryptocurrencies are very risky (highly volatile);
. Cryptocurrencies value is not linked with anything;
. Cryptocurrencies have Regulatory risks;
. Cryptocurrencies are not widely accepted (yet?)

Like in every investment, including stock options, the trader should learn about the ins and outs of the risks involved when trading this highly speculative asset class and how it fits in their financial plan – long term view – although crypto can be seen as a short term trading for some.


1. I am consistently profitable trading options

I am trading and researching options strategies for more than 10 years. I made several mistakes during my trading activity, especially in the first 5-6 years. I invested a lot in researching and understanding the risks of options trading. I tested several strategies and developed several others that I am teaching. But, most important, I am trading and showing how to do it and started this trading community.

I found my options trading style being an income trader, non-directional (or Delta Neutral) based strategies. With them I achieved consistency and I am helping others to follow and learn how to achieve consistent results. Like anyone else in trading, during the past year, I have been impacted by news and messages about cryptocurrencies trading.

Until today, I did not see any positive argument that made my mind change. I am not attracted to it. Crypto price movements or volatility present excessive risk that I cannot control. As an options trader, I am used to having some control over several variables. And its “simplistic” trading style with 50% chance and pure directional trading is not attractive to me. Trading options is far more complex but you are in control of more variables and time is on our side (my income-based options strategies). Under these circumstances, to trade cryptocurrencies is pure gambling... From my light knowledge of it, it is difficult to learn how to trade cryptocurrencies. At this moment, you can select a Crypto like Bitcoin, Ethereum, or any other new Crypto and you buy if you expect a move up or sell if you bet on its devaluation... And is very hard to predict any cryptocurrency's future.



2. Cryptocurrencies are very risky (highly volatile)

Cryptocurrencies are highly speculative. Period! Cryptos, when compared with stocks, ETFs or commodities are a very new asset class and are recently getting traction among traders (and especially retail traders). No one knows its long-term prospect. In the recent price history, we can only conclude about its huge price swings and what drives these price fluctuations. With stocks, for example, there’s a lot of financial information that drives its value and expectations. With crypto, on the other hand, there’s a potential risk that its value could go down to zero or go up exponentially. Or end up somewhere in the middle. This is why many investors refer to cryptocurrencies as speculative investments. According to specialists, Crypto is more vulnerable to investor psychology.

The cryptocurrencies future is uncertain and no one knows if a specific type of cryptocurrency, like Bitcoin or Ethereum, will even be around in a few years and, if they are, what they actually going to be worth.



3. Cryptocurrencies value is not linked with anything

When you invest in a particular stock, you become the owner of part of the company you invest in. If the business is well managed and grows, they produce a return to their shareholders. It's the same when you invest in a property, which can be rented to generate a certain income. Given its future payouts, you can easily value the investment you are willing to pay to generate that income.
But how do we value Cryptocurrencies, like Bitcoin or Ethereum to name a few? It does not produce income like a business or any property. It is simply a token that trades at whatever price people are willing to pay. It is pure speculative trading. I do not know how to value these assets… there are no fundamental data that supports any Cryptocurrency price in a given moment. Only market participants are the driving forces in the market.

How do I know at a given moment if I want to buy or sell any Cryptocurrency given its future price expectation?  On the other hand, if you have savings that you do not mind losing, it is ok to invest in this highly speculative investment and wait in the future that it will appreciate and sell for a profit (hopefully).


4. Cryptocurrencies have Regulatory risks

Regulation is another big risk to take into consideration when you decide to invest in Crypto. Recently, China prohibited the use of Cryptocurrencies, mainly due to energy-intensive mining activities and ordering major banks and payment firms (ex, Alipay) not to do business with crypto-based companies. The UK also banned leading digital currency exchange Binance from undertaking regulated activities. These are major setbacks to the usage growth of these alternative currencies.

Another issue about Crypto is about being used in “dark” businesses, supporting money laundering activities. Federal Reserve has warned about the use of cryptocurrencies for illicit transactions. And Donald Trump’s administration proposed an anti-money laundering rule that would require people who hold their crypto in a private digital wallet to undergo identity checks if they make transactions of $3,000 or more. A growing number of businesses are taking advantage of digital currencies as a form of payment. As in other financial areas, businesses may eventually be required to register and obtain licenses for particular activities.


5. Crypto is not proved to be widely accepted (yet?)

Some Crypto supporters, especially Bitcoin “lovers” are accepting this and other cryptocurrencies to be widely adopted in the future. And this is the basis of positive expectations around their price. We can usually listen to some friends that invested in Crypto, often used the argument to buy now because it is cheap before everyone needs them. This is not clear and to try to predict the future in this asset class is pure speculation. 
Cryptocurrencies like Bitcoin are not yet commonly used for everyday payments. And it's hard to see a shift in the short term from traditional electronic means, like cards. Additionally, the value of Bitcoin is still very volatile and the number of payments that can currently be processed is very low (with high transaction costs involved in making a bitcoin payment due to energy consumption).
In resume, the current fascination with Crypto feels more like a speculative mania and hype than it has to do with their use as an efficient and convenient form of electronic payment like we are used to.

The cryptocurrencies future, like its price, is still unpredictable!