The stock market has long been the ultimate cradle for money-making. Shares, bonds and their affiliates would make or break careers and livelihoods. Shareholders would peer through giant screens and calculate the day’s loot. The share market has always operated in binaries. A good day or a bad day. However, with the advent of cryptocurrencies coupled with the increase in the risk-taking attitude of the new brigade of investors, good times are herd to stay. You may ask about the volatility of the market. That remains. In fact, it may have increased by a shade too. But then one must remember, with Bitcoin and its brotherhood of Altcoins, the stakes are much higher now.
One must remember that when Bitcoin first appeared in 2007, it was valued at less than a cent. The same cryptocurrency hit the stratosphere in the first quarter of 2017, by touching $20000. The early investors who would have poured money at one cent a unit became millionaires and I dare say, billionaires. The purple patch did not last long though and Bitcoin was down to below $7000, the next quarter. N erosion of almost 75% of its previous value. Currently, it is being traded at a shade below $6000 but has stabilised since. Analysts expect Bitcoin to touch $10000 soon given its popularity.
What about the Altcoins then?
Bitcoin owns more than 50% of the market cap of the entire cryptocurrency universe. So if we have a positive movement in Bitcoin, the entire entourage booms too.
Such has been the confidence on cryptocurrencies that established and legacy institutions like Goldman Sachs and JP Morgan have been putting in a great effort to not miss the bus. In fact, J.P. Morgan Chase Chairman and CEO, Jamie Dimon, regrets calling Bitcoin a fraud once and wouldn’t want to make the mistake of missing it, again.
The other reason for giving Cryptocurrencies a hard look is to divert the overdependence on the FAAMG family. Facebook, Apple, Amazon, Microsoft and Google represent the crème de la crème of tech stocks. And that bursting like it did in 2001 is a lesson no one wants to go through again. 1997 to 2001, was the dream run every tech stock went through before the bubble burst, based on unrealistic business models and reckless investments. $5trillion was lost.
With cryptocurrencies, the idea is to play a waiting game all the while diversifying the portfolio. The returns are amazing only if you have the appetite to be patient.