It’s a cheap way to gain massive macroeconomic risk exposure. Here’s the takeaway: if you have an extremely conservative portfolio and need to add “risk-on” assets, choosing a basket of top-rated cryptocurrencies could be right for you. In other words, unregulated cryptocurrencies will one day compete against state-sponsored ones too. “There is ample evidence of speculation as well, and the value of the current cryptos will be affected by the upcoming central-bank backed digital currencies.” it was discussed as part of the C-19 stimulus,” writes Laura Gonzalez, Ph.D., associate professor of Finance at California State University, Long Beach. “China has already developed a Central Bank-backed crypto, and in the U.S. And some new competitors have recently popped up. Mom-and-pop investors have profited handsomely as Bitcoin and other currencies have rocketed in value.īut the risks in 2021 are growing - at their core, cryptocurrencies only serve to transfer wealth from one party to another. So far, cryptocurrencies have delivered on that promise. Today, people invest in crypto for one reason alone: to make money. That means investing in cryptocurrency requires strong belief that others will eventually buy it from you for even more. But when a coin falls out of favor, there’s nothing to stop it from going to zero. The more users a coin has, the more useful it becomes, and the higher its price goes. Instead, their worth comes from their users. Meanwhile, $1,000 invested in Bitcoin today might earn “just” 4-5x upside if you believe JP Morgan’s lofty $146,000 target price.īut there are also significant risks because cryptocurrencies have no intrinsic value. For example, $1,000 invested in Ethereum’s initial coin offering (ICO) would be worth $3.3 million today. To answer that question, we need to explore the world of altcoins - up-and-coming coins that you can buy for cheap. So, which cryptocurrencies can make you rich in 2021? Instead, it’s a digital popularity contest where winners keep winning and losers bite the dust. As Bitcoin (CCC: BTC-USD), Ethereum (CCC: ETH-USD), XRP (CCC: XRP-USD) and others have rocketed in value, never before has Wall Street seemed so hesitant about “digital gold,” a name they use to invoke a margin of safety.īut as any experienced crypto investor knows, that’s not the way cryptocurrencies work. Want to see Wall Street analysts at their most confused? Ask them about cryptocurrency predictions for 2021.
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