Famous personalities from the world of finance are paying more and more attention to cryptocurrencies, which indicates a rapid increase in their adoption. In an interview with Yahoo Finance, Wall Street veteran and former Prudential-Bache Securities CEO George Ball suggested that cryptocurrencies are a good addition to just about any investment portfolio.
And while he foresees an “extremely energetic rebound” in the markets in late 2021, the news poses a dilemma for investors: how to avoid risks in the face of rising bond yields, likely correction in tech stocks and rising US dollar inflation?
Answer: investing in cash and bitcoins.
Why invest in Bitcoin
Here is one of Ball’s quotes in an interview in which he shares his attitude to what is happening. The cue is from Decrypt.
Investors are now concerned that the US Federal Reserve is lagging behind the curve. The stipulated volume of stimulus for the economy is possibly more than what would be beneficial for it in the next year or two.
In other words, the Fed may «overdo it» with the release of new money amid the aftermath of the crisis caused by the spread of COVID-19. All this creates uncertainty in the markets and forces investors to look for alternative investments. One of them can be Bitcoin, the expert believes.
The best defense against risk is cash. Cash allows you to sleep peacefully at night and to take more risks with the investments you make. I think there has been a fundamental shift with cryptocurrencies that makes them attractive as part (small part) of almost any investment portfolio.
This means that the expert believes that it is quite logical to think about transferring funds to a crypt, which does not depend on the actions of the management of the banking system. And almost every investor with spare funds can do this.
As small investors jump from speculating in stocks to speculating in cryptocurrencies, they may end up pumping the crypto market even more with an influx of fresh money. Many financial experts increasingly agree that cryptocurrencies should be part of investment portfolios – although not necessarily large ones. For example, Shark Tank host Kevin O’Leary had previously stated that Bitcoin would make up 3 percent of his portfolio, while O’Leary had called BTC «junk» two years earlier.
In general, in recent years, experts’ forecasts regarding potential have been divided into bullish and superbull, reports Cointelegraph. For example, Bloomberg analyst Mike McGlone previously stated that Bitcoin is moving towards the $ 100 thousand mark and nothing can interfere with this process.
His view is based on the growing discount for Grayscale Bitcoin Trust shares, which is at the same level as in the crypto market crash last year in March. This means they have significant growth potential – even taking into account the current coin rates.
Grayscale premium (the amount by which the value of a share in a trust is higher than the market value of Bitcoin) against the background of changes in the price of a cryptocurrency. The chart highlights periods when the premium reached a negative value and BTC rushed up sharply.
Recall that the Grayscale Bitcoin Trust allows investors to purchase a stake in a trust, the value of which is approximately equal to the value of Bitcoin. Thus, large players get rid of the possible risks associated with the storage of cryptocurrency, and can still make money on fluctuations in its value.
The Bloomberg analyst is not the only expert with high hopes for BTC. Well-known cryptocurrency fan Lark Davis stated that “we have just passed the first major price wave,” and there are two more major waves of cryptocurrency development ahead. Davis bases his point of view on the Realized Cap HODL Waves indicator , which displays the number of UTXOs created in each time period for Bitcoin.
In other words, it evaluates the levels at which investors have contacted the cryptocurrency. This allows you to analyze the situation and understand in which direction the industry is moving, and what can be expected from it in the future. Apparently, the current run of the Bitcoin market is at the very beginning.
We believe that the outlook for Bitcoin and other coins in the long term is indeed positive. The niche is developing rapidly, and the blockchain is finding new uses. However, March is historically one of the worst months for Bitcoin in terms of profitability of the year, so history may repeat itself this time.
In the end, it all comes down to the fact that an investor should not rely on too quick profits and make hasty decisions that can lead to a loss of funds. Besides, the «hodle» of cryptocurrencies is not the worst decision. Especially for beginners.
