OMG network is a decentralized platform built to solve some of the problems on Ethereum. It provides low-cost, fast, secure, and interoperability between various digital assets. OMGUSD is a trading pair that is subject to high volatility.
There are several trading pairs, and identifying the best one for you is a critical aspect of crypto trading. Identifying the pros and cons of a trading pair can help you make informed trading decisions and guide your trading plan. A trading plan is another critical aspect of investment; it is informed by knowledge of the token's performance.
This guide will examine the pros and cons of investing in OMGUSD as well as weigh the pros against the cons to determine if it is a good investment.
OMGUSD Volatility
OMGUSD is a cryptocurrency trading pair comprising OMG tokens and US dollars. OMG tokens are the native tokens of the OMG Network, previously known as OmiseGo Network. The OMG tokens, launched in 2017, have experienced significant price fluctuations. Therefore, OMGUSD has a volatile price history, which can lead to positive or negative investment outcomes.
Several factors, like the general condition of the crypto market, growth of the network, social media hype, market sentiments, and regulations, can affect the price of OMGUSD. The price of OMGUSD is characterized by a sharp uptrend, often accompanied by a sharp decline after a short period.
A typical example of OMG volatility is the price surge in 2017, where it experienced about a 350% increase. The volatile nature captured the attention of investors and traders interested in making a significant profit. However, the price quickly dropped, which led to significant losses among those who bought it for a high price.
Since its inception, the price has fluctuated between upward and downward movements. However, it has never quite gotten or surpassed its previous all-time high. Investors and traders must remember that OMGUSD is subject to rapid and drastic price changes due to its highly volatile nature. Therefore, before investing your capital, do your diligent research to identify support and resistance zones and stay updated on upgrades or partnerships that could trigger social media hype, boost investor confidence, and increase demand.
Furthermore, while OMGUSD potentially offers huge gains due to the volatility and growth of the OmiseGO network, investors should weigh the pros and cons before investing due to the high risks. The next part of this guide will examine the pros and cons of investing in OMGUSD to help you make informed decisions.
Pros of Investing in OMGUSD
Investing in OMGUSD has some benefits, and this section will highlight them. Some of the advantages include the potential for huge price gains, accessibility on major exchanges, scarcity of the token, and upgrades on the network. Let us dive in!
Potential for Large Price Gains:
One of the primary advantages of OMGUSD is its potential for large price gains. Most crypto-assets do not make such a tremendous price increase within the first year. The Network is still in the early stage, so there is a potential that it could perform better in the future.
The token was launched in July 2017 and increased by 350% within the first two months. However, the price came crashing by November but did not stay still. OMG experienced steady positive market movements to reach its all-time high in January 20218. The price of OMG showed great volatility, especially since it was launched during the crypto winter. Therefore, it provided unique opportunities for short-term investors to make a profit from price movements.
2020 was another year that came with an uptrend in the price of OMG. This may be partially due to the crypto boom of 2020-2021 due to the pandemic that affected global economies. Regardless of rapid price corrections, huge growth is still possible as the OMG network gains mainstream attention. Therefore, the volatile nature of OMGUSD is an appealing feature for investors who can maximize high-risk, high-reward opportunities.
Major Exchange Availability:
OMGUSD is available on major exchanges such as Binance, Huobi, Upbit, and more. Therefore, investors have access to liquidity, making buying or selling OMGUSD easier. This is an advantage the OMGUSD has over other new and small altcoins that are typically not listed on major exchanges.
Investors usually prefer to conduct transactions on major exchanges as they are more reliable, reputable, and secure. Binance, for example, has a large user base, and increased liquidity can increase demand for OMGUSD.
Additionally, you can trade OMG with brokers like VSTAR, which offers various financial instruments. For example, you can trade OMG CFDs, which involves speculating on the price of OMG without actually owning it.
VSTAR is a reliable broker that provides institutional-level trading experience, including the lowest trading cost, which means tight spread and lightning-fast execution.
In addition, Vstar is regulated by CySEC- unregulated brokers often have a high commission, which can erode your profit. More so, Vstar offers a demo account for beginners to practice trading strategies to mitigate loss during actual trading.
On-going Project Development:
With the launch of new blockchain projects, the interest in cryptocurrencies is growing. However, the OMG Network is one of the most exciting projects for several reasons. OmiseGo is building its decentralized exchange and e-Wallet platform, which could potentially increase the value of the token.
OmiseGo is building its own network, the OmiseGo blockchain. The blockchain will be built as an open, permissionless, and decentralized network. Here, the decentralized exchange and e-Wallet platform will be hosted. The decentralized exchange will allow users to send or receive any currency or asset on the network. Therefore, the OmiseGo blockchain will serve as a blockchain as well as a hub to optimize blockchain interoperability.
The e-Wallet is an application that allows you to send, store, and receive money or assets. These projects aim to create an efficient infrastructure for transactions on the OMG network. Therefore, ongoing project development could increase demand, eventually triggering a price uptrend.
Scarcity of OMG Tokens:
The supply of OMG tokens are capped at 140.2 million. Therefore, it is a scarce commodity. According to the dynamics of demand and supply, scarcity of an asset can lead to increasing demand, which can trigger a price uptrend. On the other hand, when supply is more than demand, the price of an asset reduces. This may be attributed to decreasing investor confidence.
Therefore, the limited supply of OMG tokens combined with its potential for growth could trigger an uptrend in its market value. Additionally, when the decentralized exchange launches, investors will have the ability to stake as a way to earn passive income in the long run. More so, the token will give governance rights to the holders such that the community can have a voice in the platform's future development. As a result, investors will be incentivized to use HODL tokens on the exchange.
Cons of Investing in OMGUSD
Regardless of the exciting advantages of investing in OMGUSD, we must also consider the risks. The OMG Network is just about 6 years old, so it is still new but extremely volatile. Therefore, investors must understand the associated risks to make informed decisions. They include:
High Volatility & Risk:
The first con worth mentioning is OMG’s high volatility and the associated risks. Within its first launch year, it displayed high volatility by suddenly rising. However, it crashed by 90%, which could have resulted in a significant loss for some investors.
Since it is a new token, using fundamental and technical analysis to predict price movement would be a bit challenging. This is because we are still learning about the factors that trigger OMG price fluctuation. A high level of volatility means OMG could experience rapid and significant price changes. Therefore, OMGUSD has the potential for high returns, but the high volatility increases the risk of significant losses.
No Working Product Yet:
Without a doubt, OMG has an ambitious roadmap. However, since the platform is not yet live, the tokens may continue to be mainly speculative. There is no working product yet, so there is no real-world application to demonstrate functionality.
Therefore, OMG is surrounded by uncertainties because there is no way to measure its applications' viability, usefulness, or adoption. Since there is no working product, investing in OMGUSD is risky because the network may perform lower than expected due to unforeseen challenges.
Regulatory Uncertainty:
One of the challenges facing the decentralized community is regulations. The regulatory environment for blockchain platforms is still evolving. Some countries, like China, have banned crypto assets. In contrast, other countries like the United Kingdom and United States of America, work with regulatory bodies to ensure the finances of their citizens are safe. Therefore, regulations could significantly influence the launch and operation of the OMG Network.
Additionally, changes in regulation or the introduction of unfavorable regulations could inhibit the growth of the Network. As a result, the adoption rate is not as expected, which could negatively affect the token's value.
Opportunity Cost:
Remember that OMGUSD is a highly volatile trading pair. Therefore, investing in OMGUSD pair may have associated opportunity costs that could negatively affect a balanced portfolio. Investors must consider the risk-reward ratio of investing in OMGUSD with regard to other options. There may be safer options with a higher ratio of reward which could make a great addition to your investment portfolio. The purpose of diversifying your portfolio is to offset any loss from a highly volatile asset like OMGUSD with assets that have the potential for high returns.
Technical Barriers:
Developing and launching a decentralized exchange comes with some technical barriers. These challenges could range from security issues and scalability issues to a lack of transparency. Any technical challenge experienced by OMG Network during development and launch could delay or disrupt progress. More so, this could affect the project's potential and possibly the tokens' market value.
Weighing the Pros and Cons
It is critical for investors to weigh the pros against the cons of investing in OMGUSD. Factors like investment goals, risk tolerance, and experience can help you make decisions to minimize risks. Here are some critical points to consider:
i. Risk tolerance and investment timeframe
When weighing the pros and cons of OMGUSD investment, it is critical to consider investment timeframe and risk tolerance. The concept of risk tolerance describes how an investor can manage a situation if a loss occurs. OMG is highly volatile, so it is subject to rapid price fluctuations. Therefore, your risk tolerance can influence your investment goals, such as the timeframe and percentage of capital to put into OMG.
After considering risk tolerance, investors must determine suitable timeframes. Shorter-term traders could capitalize on volatility to make profits. However, they must be prepared to lose most of their investment if the price of OMG experiences a rapid but significant value decline.
On the other hand, longer-term holders have more potential to benefit if the project overcomes challenges associated with development, launch, and adoption. However, long-term investors must always consider risks from regulation, technology issues, and competition.
ii. Diversification of portfolio
Diversification of the portfolio is a critical aspect of investing in OMG. Although OMGUSD pair has a high potential for gains, the movement of the general crypto market is often uncertain. Therefore, investors may want to consider other established and older projects with established support/resistance zones. These other crypto assets could be useful to offset the impact of volatility associated with OMG.
iii. Potential for higher reward
Another point to consider is the potential for higher rewards if the project launches successfully. Early investors could be in a unique position to make huge profits if the network is widely adopted and performs well. However, the potential for higher rewards is accompanied by higher risks. Therefore, the outcome is uncertain as the OMG Network is still in its development phase. As with all crypto assets, predictions are largely uncertain due to the volatile nature of the market.
Other factors to consider when creating an investment portfolio include the project’s progress, team expertise, roadmap, and competition.
Conclusion
This guide has examined the main pros and cons of investing in OMGUSD trading pair. The main advantages of investing in the pair include the potential for significant gains, higher liquidity due to availability on major exchanges, and ongoing development on the network.
On the other hand, volatility, lack of a functional product, and regulatory risks are significant cons to consider before investing in OMG. Before investing in any asset, we recommend conducting thorough research to get insight into the team, competition, and key milestones to determine if the project will be viable. Research is especially important to avoid making investment plans based on sentiments or social media hype which may not hold.
One critical tip is to only invest money you can afford to lose due to the high volatility associated with OMG. However, investors with a big appetite for risk could make significant gains or losses depending on price movement.
It is important to remember that there may be a need to reassess the pros and cons of investing in OMGUSD once the decentralized exchange is closer to launching. Subsequently, there may be new developments or upgrades that could significantly influence your investment plans. Therefore, if you are considering being an early investor in the OMG Network, it is critical that you stay updated on the progress of the network.
