Bitcoin offers unique opportunities for investors. Why do experts advise taking advantage of them?
Bitcoin is a real revolution in the world of finance that needs as much attention as possible. That is the view of Daryl Ho, investment strategist and senior vice president at DBS Bank in Singapore. During a recent briefing by the bank, Ho noted that the low volatility and long decline of the major cryptocurrency has created a unique opportunity for investors that would be foolish enough to miss. We tell you more about the expert’s point of view.
It should be noted that praise for Bitcoin is not uncommon even now. For example, the day before, we heard compliments to the cryptocurrency from world-renowned investor Bill Miller. BTC is his favorite investment along with Amazon shares, and the investor considers the coin an insurance policy against financial disaster. Read more about his viewpoint in a separate piece.
Bitcoin’s power
Why is Bitcoin needed?
The popularity of the major cryptocurrency is a consequence of its fundamental utility, Ho stated. Here’s the rejoinder, in which a bank spokesperson shares an attitude to what’s going on.
Most of the methods by which you trade assets require a central clearing party to confirm the transaction. The decentralisation of BTC is thus an opportunity that cannot be realised in a system of conventional currencies because it is still managed by central banks.
That is, the expert is betting on the fundamental advantages of the first cryptocurrency, which are beneficial to its owners. This includes a limited maximum supply and a fixed issuance rate, as new BTCs and new blocks are created every ten minutes on average.
Rates of top cryptocurrencies today
Another advantage of Bitcoin, and all cryptocurrencies in general, is the open market, which operates 24/7. In theory, crypto traders can trade at any time, and they are not tied to specific geographic regions. This kind of freedom is out of the question in traditional assets – sometimes even stock market trading timelines like closing hours and weekends can cause problems.
Note that the aforementioned for crypto only works in theory – in practice, the crypto market often has periods of low volatility. It is now reaching its historical lows, which means traders simply do not have as many opportunities to make better deals. However, the same is true for traditional markets, so there is no particular downside here.
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According to CryptoPotato sources, individual problems in the cryptosphere are not stopping young investors between the ages of 21 and 42 from investing in BTC. According to a recent Bank of America survey, two-thirds of respondents in the aforementioned category are willing to allocate part of their portfolio to digital assets. They also state that it is virtually impossible to achieve high returns on their investments without crypto.
Percentage of respondents in different age groups who have already allocated a portfolio to alternative investments (including cryptocurrencies)
The survey also showed that 68 per cent of respondents who have children have already given them an explanation of how to pass the family wealth on to them. Baby boomers are expected to pass on the equivalent of $84 trillion to Generation X and Millennials by 2045. Katie Knox, a member of Bank of America’s executive management team, commented on the findings.
As we see in our clients’ families, financial behaviors and values are shaped at an early age and are preserved in the legacy passed down from one generation to the next.
We believe that 68 per cent is too high a score. Which means it is more likely to have been about entry methods to a cryptocurrency exchange or other similar centralised platform. Still, explaining how hardware wallets, Sid-phrases and other important parts of the blockchain world work takes a lot more time. However, the trend is also encouraging.
Percentage of respondents who have already spoken to their children about inheritance and real estate
Apparently, most of the older generations do not advise their children to interact with cryptocurrencies, as they prefer to stay away from this asset class. However, such lessons could be quite different when Generation X and millennials lecture their children about planning for the future of money.
Unfortunately, the bearish trend of the crypto market may still be quite far from over. This was stated the day before by researchers at analytics platform CryptoQuant. To prove their theory, they published two charts – the volume of payments for fundings on margin trading positions and the Spent Output Profit Ratio (SOPR) indicator.
Low fundings payments show lack of demand for the asset
Recall that the Spent Output Profit Ratio (SOPR) helps identify periods when long-term investors are selling BTC at a loss or, conversely, taking profitable positions. At the same time, the Funding or Funding Rate is a periodic payment to holders of short or long positions from the other side of trades, in a leveraged trade, i.e. a so called margin call.
SOPR indicator
Which means that most are now selling their BTC at a loss when the demand for the asset is low. This is a bottom forming trend, but the process may take longer than many expect.
More and more experts seem to be able to discern the benefits of digital assets. What is particularly important here is that such arguments have been voiced by a bank representative. Consequently, the advantages of decentralization are obvious even to those who should not support it.
What do you think about it? Share your opinion in our Millionaire Cryptochat, where we discuss other important developments for the crypto world.
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