The bitcoin industry has turned itself into the star performer in 2020. Its value has multiplied four times and since the beginning of the year. There was a small drip in March 2020 the cryptocurrency then took a step forward, breaking its record of $20,000 per bitcoin in 2017 to $34,000 in Jan 2021.
The financial investors who have invested in the bitcoin industry in this peak time have recurred about 50% return in just three years.
This is indeed making the investors go gaga about the cryptocurrency. However, the four reasons that people at https://rubix.io/ has noted in various economic surveys can be considered by the investors before investing in the crypto wallet are listed in this article. Let us find out what are those reasons:
#1. Bitcoin is a substitute for Gold
The price of gold was somewhere around 27% in 2020. It is one of the best commodities to invest in. However, the return on gold last year was outdriven four-time by the rise in bitcoin in 2020.
As a result, most of the investors have considered shifting a small part of the portfolios to the crypto industry.
If you are confused about whether to invest in gold or bitcoin, read this article. However, in the large trading market, it has been observed that the model portfolio for moderate-risk clients is 70-30-10 in equities, debt, and gold.
The comfort of shifting to cryptos was more among the family offices last year. It is generally predicted that institutional adoption will be high in the coming years.
#2. Cryptocurrency is a huge Global interest
In October 2020, PayPal, the popular online payments provider allowed investors to hold cryptocurrency in their wallets. Even it was noticed US companies like Microstrategy also allowed a portion of treasuries in it. Even the skeptical of the finance industry are changing their views.
#3. Scarcity in the supply of Cryptocurrency
The supply of bitcoins or cryptocurrency is restricted somewhere around 21 million. Around 18 million cryptos have been dug out, or there are out in the market circulating.
Unlike the currencies like the dollar or the rupee, this supply flow is not easy to control by the government or central banks. It is one of the undying facts that comfort cryptocurrency investors.
Such investors might feel uncomfortable with the rise in money printing by the central banks during the pandemic, which attracted them to the crypto industry. Thanks to bitcoins, the US Federal Reserve share has increased from $4 trillion to $7 trillion in 2020, which is about 75% of growth share in one single year.
#4. Acceptance by the finance industry
Most of the individuals have entered the crypto industry but they were unknown of the facts whether they are accepted by their nation or not. However, things changed in 2020, as the RBI in India quashed the ban on bitcoin-related payments, setting the stage for the revival of cryptocurrency investment.
Bitcoin investors of today also seem to have a background in the technology. The concept of blockchain and the innovations happening within the decentralized finance mode of crypto need a scoop of technology knowledge.
What’s Your Take?
It is difficult to estimate the total size of the cryptocurrency investor. There are contradictions in the figure who have invested in this industry. But there is strong evidence of a growing investor base since the March verdict.
As per the Google search data, a sharp spike has been noticed in the searches for cryptos in December. However, three facts that need to be resolved so that the bitcoin industry keeps growing are: – it should be regulated, second it should have cash flow like stock or bond and third the investor base is still small.
As per the latest economic survey done by Mint, the net worth of the investors can treat the cryptocurrency as a punt. And if we do not look down upon it as an investment if they are comfortable with the volatility.
However, a small piece of advice for the readers, if you are into the retail business it is better to stay away from the crypto industry in case you do not understand the product. Have a good grasp on the product before investing.