Crypto is one of the biggest buzzwords of our times, but is it really worth all the fuss? If you’re on the fence as to whether you should take the plunge and start investing in this asset, we suggest starting with some research to see if it is right for your wealth management plan.
You’re probably familiar with the old adage not to “put all your eggs in one basket.” This sentiment absolutely applies when it comes to investing.
Many people run into financial planning issues when they aren’t focused on diversifying their investment portfolio. This especially happens when they are too focused on traditional assets like stocks and bonds and not on the opportunities that alternatives provide.
Crypto is one alternative asset growing in popularity to help diversify an investment fund. While it’s true that cryptocurrency can be volatile, it also operates in a separate sphere from a traditional investment. This means that it is often isolated from sweeping marketwide events. Factor in its decentralized nature and global interchange, and crypto is a smart choice for a balanced alternative investment fund.
2. Dramatic returns are possible
There are a lot of uncertainties about the future of crypto. However, the reality is that all investments come with some degree of risk. It simply depends on your investment objective on how much risk you want to take on.
What we do know for sure is that early investors in Bitcoin made a huge amount of money. And with new cryptocurrencies emerging every day and rapid innovation still underway, today’s investors interested in alternative investment strategies also have the potential to turn a significant profit.
An individual investor just needs to have some comfort with risk. And you need to practice due diligence across everything from where you buy your cryptocurrency to which cryptocurrencies to choose. If that is possible, this digital currency is a smart investment decision when veering from traditional asset classes.
3. You’ll enjoy unprecedented transparency
Because nearly all blockchains are made up of open-source software, all data is available at all times, and every transaction is viewable. The result? Cryptocurrency’s blockchain technology sets a new standard for financial transparency.
Plus, the data is recorded in a way that makes it nearly impossible to alter or “cheat.” This facilitates increased trust and accuracy-and decreased risks for investors. Crypto may not be tangible assets, but the transparency makes up for that.
4. Digital currency is increasingly prevalent
Cryptocurrency is still very new. Even just a few years ago, it was hard to envision a world in which invisible digital tokens could be used to transmit value in our everyday lives.
However, a lot has changed in a short amount of time. Today, many merchants accept bitcoin and other cryptocurrencies-both online and in physical stores.
As cryptocurrency grows increasingly mainstream, it will become easier and easier to use in the real world.
5. Adoption is far-reaching
It’s not just retail and service establishments that are accepting bitcoin and other cryptocurrencies. Once dismissive of cryptocurrency, institutional investors like BlackRock-the world’s largest asset manager-have added crypto to their balance sheets. This trend is only expected to continue.
As of a September 2021 study conducted by Fidelity Digital Assets, 52 percent of institutional investors said they’d invested in digital assets, while 84 percent had expressed interest in investment vehicles comprising digital assets.
Said Fidelity Digital Assets president Tom Jessop, “We’ve reached an inflection point where many institutions are deepening their commitment to the space and seeking new investment opportunities to express that interest in portfolios - in some cases, looking to incorporate other digital assets in addition to Bitcoin.”
Meanwhile, new partnerships are constantly emerging, such as one between Deloitte and emerging cryptocurrency Avalanche (AVAX). Partnerships like these signify the growing confidence of traditional financial entities in the crypto asset class.
6. It’s here to stay
If you think you missed the boat on blockchain, think again. Sure, you may be kicking yourself because you didn’t get in on the ground floor of Bitcoin. But cryptocurrency is still in its infancy and near-endless opportunities remain. And when you don't have to worry about the volatility of the stock market, what's not to love?
According to an Allied Market Research report from August of 2021, the global cryptocurrency market is expected to hit $4.94 billion by 2030, up from $1.49 billion in 2020. Cryptocurrency also accounts for an increasing share of the world’s money.
Investing in Crypto
As mentioned earlier, new entrants in the cryptocurrency field, each with their own value propositions, are constantly shaking things up. Every new development and potential application represents an exciting and untapped opportunity for individual investors.
If you’re looking to diversify your investment portfolio and are considering including this virtual currency as part of your strategy, there’s no better time than now to take action. To learn more about cryptocurrency or to start investing in it, check out Rocket Dollars Solo 401k or IRA.