Cryptocurrency has made enormous gains in its wider acceptance across the more mainstream finance landscape in recent years.
While there remains hesitance from some who are accustomed to traditional assets, diversification into crypto from more conventional investors is gaining traction. Here, we look at some of the reasons why.
Diversification:
It’s one of the investment fundamentals. Now, crypto is offering another way for investors to vary their portfolio and get wider exposure to more, newer and exciting assets. As with all investments there is risk, especially given the crypto market’s volatility, but a well-balanced portfolio with an assignment to crypto can help build an attractive risk-return profile.
Growth Potential:
Cryptocurrencies are highly attractive and extremely compelling for the growth they can experience. The potential for significant returns is a possible head-turner for investors accustomed to more reserved assets, with modest but less risky returns. Therein lies the trade off: crypto is often far more perilous, and the big gainers are far outnumbered by those which do not experience any - or negative - growth.
Accessibility and Flexibility:
Some traditional assets lack both through long-term lock-ins and cumbersome processes. Crypto operates 24/7 with instant access, and has the ability for investors to react quickly to market movements and changes.
Inflation:
Thanks to their limited supply cryptocurrencies - particularly Bitcoin - are often seen as a potential hedge against inflation, due to their resistance to dilution of value through inflation.
The descriptions provided above are all based on publicly available information, and cannot be considered as financial advice or encouragement to invest. Sources of information used in this post include Investopedia and Forbes. All transactions involving digital assets involve certain risks, which you should familiarize yourself with prior to any investment.