Are Digital Assets The Best Investment You Could Make In 2020?
- Investing could be a remarkably positive endeavor for certain individuals or similarly damaging to others. The point being to purchase goods not consumed immediately but considered to increase in value after a specific period, investing requires skills, knowledge, experience, and sometimes luck.
However, having numerous established and not so traditional options to invest in could hamper the decision-making process, especially for newbies. The introduction of cryptocurrencies also made the situation even more complicated, and today, we will examine if digital assets are still one of the best investment opportunities in 2020.
Investing In The Digital Asset Field Based On History
After the official launch of Bitcoin in early 2009 and the thousands of digital assets that followed, cryptocurrencies became a massive hit for proponents and investors. Late 2017 and early 2018, also referred to as the parabolic price increase, attracted even mass media attention, which ultimately prompted FOMO (fear of missing out) and pushed the prices to impressive highs.
The most popular digital asset representatives, namely Bitcoin and Ethereum, reached their all-time highs of nearly $20,000 and over $1,400, respectively. Nevertheless, what followed these rapid price surges were equally deep slumps. In the year that followed, the entire market endured a massive bear market, as BTC bottomed at below $3,200 in December 2018, and Ethereum dipped to $80.
These events led to severe speculations of price manipulation and briefly turned lots of investors away from the field. Despite those fleeting moments, however, cryptocurrencies remained largely profitable investment opportunities.
Bitcoin reversed its downtrend and ended 2019 at about $7,150. According to a study on the matter, this made it the best performing asset throughout the entire decade. $1 invested in the largest cryptocurrency by market cap at the start of 2010 would have been worth more than $90,000 at the end of it. This notable result means that BTC marked a near 9,000,000% ROI in ten years.
The new century, which began merely a few months ago, also sees Bitcoin outperforming most traditional investment options. Data from the cryptocurrency monitoring company Skew reveals that BTC’s year-to-date gains amount to over 28%, while gold is at 18.72%, and the US dollar is at 4.35%. Contrary, the prominent S&P 500 index has declined in value by 2.34%, and crude oil (WTI) has plummeted since the start of the year by 34.36%.
- Institutional Interests Approves
While such price performances attract a specific set of investors, particularly retail ones, when it comes down to real adoption in any investment field, institutional investors’ interest is crucial. And, the demand from such investors has been spiking in the past few years.
A valid example comes from one of the first US publicly traded companies focusing on digital assets and blockchain technologies – BTCS. The firm recently announced its continuously increasing holdings for the second quarter of 2020. BTCS expanded its digital asset positions to more than $1 million, representing a surge of more than 130% compared to Q1.
The company outlined that during the April-May-June period, it had increased its Bitcoin and Ethereum stakes by accumulating 33.7 BTC and 1,319 ETH. BTCS highlighted the growing demand from its institutional clients and the assets’ capabilities to serve as a great store of value as the primary reasons for these purchases.
It’s also worth noting that BTCS plans to continue diversifying its portfolio in order to provide even more alternatives for institutional investors to enter the cryptocurrency field.
Is Investing In Cryptocurrencies Good In 2020: Conclusion
Investing in the cryptocurrency field typically raises questions for people unfamiliar with the matter, regarding the frequently high volatility levels or if they have missed the train since the prices are a lot higher than years ago.
However, the historical data of Bitcoin and other digital assets and the increasing demand from institutional investors suggest the opposite. While the market has indeed skyrocketed in value, it’s still early in terms of mass adoption, leaving lots of room for additional price increases.
- Moreover, the growth in institutional investors’ interest was recently confirmed by the prominent hedge fund manager Paul Tudor Jones III. He believes that allocating funds in BTC will serve as protection against the anticipated rise in the inflation rates.
Ultimately, all of this data means investing in the digital asset field in 2020 could indeed be profitable. Yet, it’s worth noting that future investors should do their own research before committing any funds.