Is cryptocurrency good for investment?
Cryptocurrency is all the rage in markets worldwide. Why should you value crypto? There are many reasons for the continuing popularity of cryptocurrencies.
Cryptocurrencies are greatly valued as far as market capitalisation goes. Given that it has gained more acceptability as an alternative asset, institutions and companies rightly consider it a venture capital-backed asset.
Currently, there are several ways to purchase bitcoins. Among the commonest are crypto exchanges and platforms. But is cryptocurrency good for investment? The future of cryptocurrency is undoubtedly bright.
Is crypto a good investment for the future?
Cryptocurrency investment is a lot like stock market investing. Relative to conventional investments, cryptocurrency has many advantages:
Cryptocurrencies are among the most liquid assets given the global development of trading platforms, online brokerages, and exchanges. At rather affordable rates, you can swiftly exchange cryptocurrency for fiat or gold. It is increasingly apparent that cryptocurrency is a viable option for long-term investment, given strong market demand. ;
- Minimalistic trading
Stock investing requires a certificate or license for ownership. To trade a company’s share, you have to proceed thru a broker. Cryptocurrencies are more versatile. They can be bought/sold thru crypto exchanges and stored in a wallet. Bitcoin transactions are close to spontaneous. Stock trading orders take from days to several weeks to settle. ;
- Digital storage
Cryptocurrencies are less prone to seizing or fires and hardware failures. Cryptocurrencies’ ledgers’ decentralised structure can be thanked for this. Not only is the data kept off-site, but also duplicated to nodes globally. ;
- New opportunities
High prices combined with high volatility make for great gains. New cryptocurrencies bring in new opportunities regularly. ;
- Value and accessibility
The value of Bitcoin, the most valuable cryptocurrency, is comparable to precious metals ;
Cryptocurrency can help in diversifying an investment portfolio. It has minimal linkage with stock market results. A small cryptocurrency investment may magnify returns and risk-adjusted returns , accompanied by reduced volatility and maximum drawdowns.
Defining alternative investments
In case you are not used to alternative investments, they are non-correlated assets. Therefore, they cannot be categorised with stocks, bonds, cash, or cash equivalents.
The implication is that their performance does not follow that of other asset classes. Since the price of these assets moves in other directions relative to other investments, there may be a way to hedge against market downturns.
Per a PPB Capital Partners 2021 survey, the majority of financial advisors were going to advise boosting or keeping their clients’ concerns with alternative investments. Many advisors were expected to suggest increasing alternative exposure to 5%-10% of the portfolio.
Cryptocurrencies past Bitcoin
Whether you are the type that can take some risk , you may have to evaluate cryptocurrencies other than Bitcoin. Till date, by even conservative estimates 6000+ cryptocurrencies are vying for our attention.
Is crypto a good investment for the future? ‘Alternative’ reality
Blockchain-based technologies, including cryptocurrencies, are gaining wider acceptance. Goldman Sachs declared Bitcoin and other cryptocurrencies as a separate alternative asset class in May 2021.
Ponder your financial goals to evaluate if there’s a place for crypto in your portfolio in case your strategy includes alternatives. You ought to be able to recognise the diverse classes created and organise their allocation within your portfolio as investment opportunities keep developing.
You may buy cryptocurrencies on Kaken or other cryptocurrency exchanges. For the said purpose, you have to open an account with the exchange. You could also buy crypto thru broker accounts permitting such transactions, like those provided by Robinhood.
If you do not wish to experience the rigmarole of opening a separate account and managing a cryptocurrency wallet, there are other options to help you with cryptocurrency exposure.
You could buy stocks of a company that produces blockchain technology or in cryptocurrency mining firms. Another is thru investing in futures, where cryptocurrency is the underlying asset. For example, the CME permits Bitcoin and Ether futures trade.
Then there are investment trusts from the jokes of Grayscale. These private funds frequently have high minimum investment prerequisites and annual fees.
Not least important, the first bitcoin ETF started trading on the NYSE, October 2021. The ETF provides investors with a chance to get in on the crypto hysteria , albeit with the aid of a managed fund.
Cryptocurrency hedge funds
Hedge funds are:
- Generally limited liability companies.
- Pooling investors’ money and using risky strategies to create high returns.
Prior to your investment in a crypto hedge fund, there are things you ought to know.
Is cryptocurrency good for investment? Before you invest
Investments are inherently risky. However, crypto and hedge funds carry more than their share of average risk. The combination of the two is actually doubly risky. This implies that you can earn lots of money in a short time in crypto hedge funds, and you can just as easily lose that lovely loot. The next big thing is here, and no investor wants to miss out on it. Invest in cryptocurrency with Investby. Read the Investby review.
Investing in the wider stock market through a fund is conservative compared to crypto investing.
If you wish to get direct exposure to cryptocurrency demand, cryptocurrency is a smart investment. The rate of the crypto boom is a good indicator of the future of cryptocurrency. Furthermore, Crypto investment is right for diversification since cryptocurrencies are deemed to be on their way to official recognition and general popularity.