Less than a decade ago, the very idea of digital currency would have appeared to be ridiculous and near illogical. Currencies that do not exist in a physical form and are unbacked by any government are by right worthless.
As recent events have shown us, cryptocurrencies appear to have defied all logic and have now become mainstream investment assets. From Bitcoin to Ethereum and various altcoins, investors have begun turning to crypto investments for a variety of reasons.
These range from diversification to the pull of attaining extraordinary rates of returns within a short span of time. Regardless, the fact of that matter is that cryptocurrencies have become a mainstream investment.
Let us now take at why investors have once again taken to jumping aboard the crypto train.
1. High rates of return
If you haven’t been living under a rock, chances are you’ve quite likely seen or heard of how Bitcoin millionaires were seemingly minted overnight.
Back in 2013, crypto enthusiasts were stunned when BTC prices went through the roof. Initially trading at just $0.15 per coin, Bitcoin prices quickly soared to well over $3000, netting investors with four-digit percentage returns.
The extreme volatility of Bitcoin and other cryptocurrencies have made them a popular investment for those looking to quickly multiply their wealth. Even now with Bitcoin valuations trading slightly under $40000, the market for cryptocurrency is still a bullish one.
Given how saturated the stock market has become, cryptos have proven themselves to be an excellent alternative investment. Besides Bitcoin, Ethereum, Dogecoin, and Litecoin have all performed similarly.
2. Institutional investors
Building on our previous point, the crypto market bull run has also similarly attracted larger, institutional investors such as JP Morgan.
As cryptocurrencies are entirely unregulated and decentralized, they are remarkably resistant towards shifts in government financial policies. Because of this, some experts believe that Bitcoin and other cryptos could indeed compete with gold as a kind of safe haven investment.
The entry of various institutional investors into the market could be an indication of crypto’s acceptance as a mainstream asset. Hence, thanks to this so-called ‘stamp of approval’, demand for cryptocurrencies have risen significantly and also drawn in more casual investors who would typically avoid crypto.
3. Cryptocurrencies are a viable long-term investment
Blockchain technology and cryptocurrencies could be perhaps some of the most important technologies to come about today. The connectivity brought to us by the internet has made it possible for us to connect with one another unlike never before.
As a result of this, the world of e-commerce and online shopping has flourished unlike never before. Coupled with the need for cashless payments and mandatory social distancing, the future of digital currencies is set to be a bright one.
Some experts have even claimed that cryptocurrency prices could surge well above the $100,000 mark in 2024.
Given how blockchain technology allows funds to be transferred instantaneously from anywhere around the world at a low cost, it would not be unusual to see Bitcoin becoming a new medium of exchange.
As the demand and use for cryptocurrencies begins to rise, we will likely see crypto valuations also increasing in turn. Thus, making the case for it as a viable long-term investment.
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4. Rising political uncertainty
From the United States to Myanmar, political uncertainty around the world is on the rise. With the full brunt of the pandemic recession yet to be felt, the outlook for the rest of 2024 remains shaky.
The COVID-19 pandemic has forced entire countries into lockdowns and caused billions of dollars in damage to the economy. As unemployment rises and citizens become increasingly desperate, political uncertainty is sure to follow along shortly.
In South Korea for example, investors have taken to stocking up on cryptocurrencies like Bitcoin as a hedge against falling currency values as a result of rising tensions with North Korea. The decentralized nature of cryptocurrency offers investors a degree of insulation from government and political uncertainty, thus making it a good hedge.
If 2024 was an indication of what the future may hold, 2024 is likely to be an even wilder year. However, this could in fact be a boon for crypto enthusiasts and those looking to get aboard the train.
