It is pretty incredible to think about just how rapidly cryptocurrencies have been accepted by the investing community as a viable investment. Not just retail investors, but large, global banks and other institutional investors have not been shy about announcing that they are either actively buying and holding cryptos, or are at the very least allowing their customers to. So is this the golden age of cryptocurrencies? Some analysts and crypto enthusiasts think that the movement is only getting started and that we are inevitably headed towards some sort of currency evolution. Others are a little more skeptical, and believe that this is just another in a long history of crypto bubbles that pop up from time to time. Let’s dive deeper into a few reasons as to why 2021 could be the best time in history to invest in cryptocurrencies.
Scarcity: Okay, not all cryptos are built upon the idea of scarcity and finite amounts, but the main one is. Whether you believe it or not, the actual supply of minable Bitcoin is finite, and it is getting scarcer by the day. Holding or Hodling has become a popular mantra amongst crypto investors, with the basic idea being that the longer you hold a cryptocurrency, the higher the price will go. The idea is somewhat rooted in long term equity investing and the basic principles of an efficient market hypothesis.
With both institutional and retail investors getting into Bitcoin, the supply is theoretically getting smaller by the day. Sure, some investors trade Bitcoin like day traders trade stocks, but a vast majority of people are starting to hold onto it for stored value. Elon Musk himself recently came out and said that Tesla bought $1.5 billion worth of Bitcoin, which shows just how mainstream it has become.
Access: Like with stock trading on apps like Robinhood, cryptocurrencies can be bought on dozens if not hundreds of crypto exchanges available on the internet. Anyone can start up an exchange account now and buy some cryptocurrencies, rather than the old days where one would have to mine them with extremely powerful computers. Even popular fintech apps like PayPal and Square are offering users the ability to buy and sell cryptos with the funds they hold in their accounts.
Growth: Current cryptocurrency levels are soaring, with major coins like Bitcoin and Ethereum hitting daily new all-time highs. Although inherently riskier than stocks, the returns from cryptos are potentially far greater in a shorter amount of time. In an age of investors where people are trying to get as wealthy as possible as quickly as possible, cryptos offer an incredible vehicle to realize near instantaneous wealth. The downside of course was seen earlier this year when Bitcoin crashed nearly 15% in a single day. Since crypto markets are open twenty-four hours a day and seven days per week, there is a greater chance of missing a surge or drop in price, that simply does not exist on the traditional stock market. Still, the allure of rapid growth continues to entice investors into jumping head first into crypto investing.
Stankevicius Group is launching a digital asset bank in Q2-Q3 later this year in 2021.
