Most people know somebody who bought crypto 12 months ago and made a substantial gain; market beating any other asset class. Most also know somebody who bought crypto a few weeks ago and is bemoaning their loss after the price plunged up to 50% in a few weeks. Short-term, cryptocurrency is an exquisitely volatile proposition, where many ‘investors’ are trading the market for quick gains.
However, there is a smaller and more enlightened community growing; as crypto for wealth building community starts to gain traction, platforms such as Dacxi are set up to assist medium/long term holders rather than traders. There is a growing demand from UK retail investors of those sensibly looking to diversify their portfolios out of cautiously performing stocks, shares and bonds and add an element of ‘greater risk, greater return’.
The big holdings in Bitcoin and other cryptocurrency are not with traders, but so-called ‘Bitcoin Whales’ who have a ‘buy and hold’ strategy. Unlike traders trying to ‘time the market’, Whales have a ‘time in the market’ strategy. Like the early investors in tech-stocks they believe that a decentralised digital global currency, devoid of any sovereign or political interest, is inevitable.
They see multi-national businesses building substantial holdings in crypto both as a treasury asset, with an aim of safeguarding against the ongoing devaluing of cash, and to facilitate cross-border global commerce without incurring foreign exchange costs.
Understanding the irresistible pace of technological change, they realise that, with consumers already looking after their money online and in digital wallets, the adoption of digital currencies will soon cascade down to the average Joe.
The inescapable fact is that, within their lifetime, most people working now will be able to opt to be paid in cryptocurrency. They will be able to use crypto for pension planning, as many of Dacxi’s platform users have done.
It will revolutionise finance for all.
Whilst I would never suggest ‘betting the ranch’ on crypto – investors should remain cautious and diversified. However, blue chip coins such as Bitcoin, Ethereum and Litecoin have proven popular with institutions, and demand for them is increasing around the planet. For those with an appetite for a little risk, building a small holding of crypto merits consideration.