Not so long ago, cryptocurrency was considered by the mainstream financial media to be nothing more than a speculative fad. That era is over. The 2020s will be the first full decade where cryptocurrency is a legitimate asset class, and investors who don’t accept that reality and adjust their portfolios appropriately are missing out.
- Mainstream adoption.
- Minimizing trust in governments and institutions.
- Cryptocurrency is a hedge.
- A deterministic asset.
While some may find this first point to be the weakest, investors who believe in the power of long-term trends may find some “blue chip” cryptocurrencies, such as the bitcoin, or BTC, and Ethereum’s cryptocurrency, to be increasingly central. Full attention should be paid to the mainstream. Sky, or ETH.
In particular, some of the world’s largest and most sophisticated companies are buying a large number of cryptocurrencies: in February, Tesla (ticker: TSLA), S&P 500 members and among the most publicly traded companies in the United States. One, bought for $ 1.5 billion. Bitcoin.
Digital payments company Square (SQ) also took a chunk of its balance sheet and put it in Bitcoin, buying $170 million worth of the digital currency in late February.
Further, the leading cryptocurrency exchange, Coinbase, is about to go public at a valuation of around $100 billion, and the world’s largest derivatives exchange, CME Group (CME), began offering Bitcoin futures in late 2017. Just last month, it began offering ether futures. Ether is the second-largest cryptocurrency by market capitalization, next to Bitcoin.
That’s just a drop in the bucket compared to the total addressable market of money that can still realistically be converted to cryptocurrencies. If Apple (AAPL), for instance, converts just 10% of its cash into Bitcoin, the company would end up buying about $19.6 billion worth of Bitcoin – more than 10 times Tesla’s landmark $1.5 billion purchase. Then you’ve got trillions more in corporate cash still sitting on the sidelines – not just in the U.S. but across the world.
Minimizing Trust in Governments and Institutions
It is not just a growing course of corporate support that gives permanent strength to blockchain-based currencies. From an individual investor’s point of view, digital currencies such as BTC and ETH help prevent the risk that some retail investors consider when making portfolio decisions: trust in governments and financial institutions themselves.
Cryptocurrency Is a Hedge
Patrick Ward is the founder of NanoGlobals and a former employee of Wedbush Securities, one of the first clearing houses to offer Bitcoin futures. He says that until recently 2017, many people on Wall Street considered the bitcoin to be nothing more than a speculation. This year, JPMorgan Chase & Co. (JPM) CEO Jamie Damon famously denounced it as a fraud, saying “if you’re stupid enough to buy it, you’ll pay for it one day.”
“Now, in a time of rising stock prices and unprecedented economic uncertainty, the issue of corruption in the domestic portfolio is simple: diversification,” Ward says.
Ward says that “in times of uncertainty, gold and bonds were seen as ‘safe havens’ investments and the corrupt currency, to its credit, therefore managed to attract the attention of investors.” “It’s done,” Ward says. “Immediately aside from its newly found position as a counterweight to the stock, the corrupt currency is the US currency for conservative investors (who are accustomed to cashing in a large portion of their portfolio). Helps to avoid excessive exposure to. ”