Investors are constantly looking for ways to make more money year in year. However, today's venture capitalists are caught in the confusion of which assets to put their money in. The debate investors are faced with now is choosing between traditional finances and crypto-assets or both.
With the recent advance of cryptocurrencies, investors have numerous new options: digital and traditional. Since bitcoin first emerged in 2009, the traditional stock market has been influenced significantly—crypto market behaviours affect traditional stock market prices. This is true given that more and more people are keeping their wealth in digital currencies and approximately 5,600 cryptocurrencies are being traded today.
There is a general opinion that the volatile behaviour of crypto markets makes it an unsafe investment avenue. However, crypto might be an ideal investment choice for people looking at making huge profits from their meagre investments. Since this year began, the crypto market has witnessed unprecedented growth in its market cap from $218.4 billion to $303.1 billion, representing at least 65.92% increase. Even funny is that the increase happened during a turbulent time—COVID-19 when stock markets crashed.
According to data from Yahoo Finance, as of December 2019, bitcoin, for instance, witnessed a 9,150,088% return on investment. Sounds complex, right? Let’s put it like this: if someone invested $100 in bitcoin in 2009, that $100 would have been $2.9M by the end of 2019.
On the other hand, a $100 investment in Amazon stock would attract a 3,156% return on investment for the same 10-year period. Looking at the gaps between return on investment of the two stocks should help one make an informed decision as to which stock to put their money in.
Although stock market growth has not been as volatile as crypto’s, it would not hurt to say stocks can be very unpredictable, too. Let’s take a look at the S&P 500 index which was about $2,000 in early 2015. In June 2020, that same stock market was seen at $3,000. How did that happen? It is volatility.
Crypto trading could be the next big investment opportunity due to its resilience during stormy situations such as pandemics, war, inflation, among others. While crypto markets surged, stocks have witnessed the worst crash in history during this COVID-19 emergency. In March, Dow Jones Industrial Average (DJIA) dropped 6,400 points or 26% in just four trading days.
Besides, cryptocurrencies have experienced widespread adoption lately and its legal status is becoming more visible. CoinIdol, a world blockchain news outlet has been closely monitoring the global acceptance of cryptocurrencies. It found out that Switzerland is now a crypto nation, while at least 151 countries in the world had crypto presence.
In short, both stock and crypto markets are unpredictable and any investment venture, needless to say, is associated with risks. Although there is a general sentiment that crypto markets are mostly speculative, stock markets have been exposed to even more uncertainty lately, making many people conclude that crypto is a perfect venture. Nonetheless, an investment undertaking must incorporate thorough research and risk assessment or it is bound to fail.