Those new to cryptocurrency may wonder what the big fuss is all about. A person can invest money in all sorts of ways. With so many options, why buy Bitcoin at all?
We’ll take a look at some reasons.
Bitcoin diversifies your assets.
Diversification is standard investing advice for a reason. It helps you mitigate risk and maximize returns by investing in different areas. This can mean investing in different industries or investing through different assets–stocks versus bonds, for example. Cryptocurrency would likely check both boxes for most people.
Of note: There’s a limit to how much you benefit from diversifying just within stocks, according to Investopedia: “Obviously, owning five stocks is better than owning one, but there comes a point when adding more stocks to your portfolio ceases to make a difference.” What better way to truly diversify than with a non-stock medium as unique as Bitcoin?
Duncan MacInnes, investment director at London-based investment management firm Ruffer, puts his money where his mouth is: “Our move [at Ruffer] is about spreading investment risk. We have invested 2.5 percent of our entire $27 billion of assets in Bitcoin as an insurance policy–just as we have put money into gold and government bonds.”
Bitcoin is a safe haven.
A safe haven investment is expected to retain or increase in value during times of market turbulence. Bitcoin certainly did that during the pandemic, increasing its worth by 1000% in just over 12 months.
Indeed, cryptocurrency has experienced a dip recently, and even before that, not everyone considered it a safe haven. Yet, gold is considered a safe haven asset, and our recent comparison of gold to Bitcoin demonstrated if you invested equally in the two near Bitcoin’s beginning in 2009 or even well after it in 2017, Bitcoin would now be worth roughly 30 times to 4 million times more than that same investment in gold.
The numbers speak for themselves. Despite worries about cryptocurrencies, Bitcoin is legit and has proven itself over time.
A younger demographic is purchasing Bitcoin.
Today, more than 21.2 million adults, or about 14% of the U.S population, own cryptocurrency such as Bitcoin or Ethereum. The majority (74%) of cryptocurrency owners today fall between the ages of 25 and 44, with another 19% between the ages of 45 and 55.
Younger demographics define our future because, frankly, they’ll live to see it. So, if they’re buying and using cryptocurrency, expect the trend to continue as the demographic increases their earnings through the years.
Should I buy Bitcoin now?
Cryptocurrency is experiencing a dip right now, so it’s a great time to get more Bitcoin for a lower investment. With all the factors we have discussed here in play, we anticipate Bitcoin will trend up again soon!