Why Don’t People Buy Crypto Stocks?
Investing In Bitcoin Is Safer Then Crypto Stocks
Investing in Bitcoin is like buying a house. The asset stays the same and appreciates over time. It will never be worth zero dollars unless the asset is destroyed; luckily, for Bitcoin, it can’t be. Technically, crypto stocks have a little more risk because they are real businesses that have to hit financial targets to stay afloat. Stocks can be a very volatile investment if Bitcoin enters another 4-year bear market. My suggestion for peace of mind, only invests in crypto stocks that you have done in-depth research on and have enough capital to withstand another bear market.
Bitcoin Gives Better Returns
Bitcoin has by far been the best-performing asset since its inception in 2009, with returns of 200% a year. These returns are too good to ignore, but this does not mean it’s perfect. It has had its ups and down’s along the way. Similar to the stock market, nothing goes up forever without having corrections. Cryptocurrency stocks obviously correlate with Bitcoin Prices, and since the beginning of January, bitcoin has had a fantastic start to the year with great returns of 68%. In comparison, stocks like Galaxy Digital are up 225% and don’t look like they are slowing down anytime soon. Crypto stocks not only get the Bitcoin appreciation from spikes, but they also get a boost in share price when there are healthy financials, media, growth, uplistings, etc.
Crypto Stocks Don’t Give Real Exposure To CryptoCurrency.
This is not true. Investing in crypto stocks gives you exposure in different ways than just holding a coin. When you buy a stock like Microstrategy, they hold over 90k bitcoin’s in their treasuries. With all of the Bitcoin in the company’s treasuries, their earnings significantly correlate with Bitcoin price gains. Of course, you also get the legend Michael Saylor representing your stock and Bitcoin simultaneously. That sounds like a win-win situation. Microstrategy is just scratching the surface companies like Galaxy Digital Holding are becoming the Berkshire Hathaway of cryptocurrency. They have their hands in multiple jars like mining, lending, cold storage. If this is not exposure, I don’t know what is.
Bitcoin Is A Bubble
I’m a long-time believer in Bitcoin and Blockchain technology, and I truly think it will be the future. But let me play devil’s advocate here. We are at a turning point in this cycle, and Bitcoin is likely to either aggressively move upwards or downwards in the next week. If we enter a bear market, you will see retail investors panic sell. Know that eventually, this bull run will end, and the price will come crashing down. If you have enough conviction to hold this for 5-10 years truly, you will be fine. But if you haven’t been in this space long enough to see some of your holdings shrink by 90%, buckle up, and don’t panic!
Personally, I don’t fear a bear market anytime soon with all the recent headlines of companies like Tesla accepting Bitcoin as payment and institutions like Morgan Stanley, Jp Morgan creating bitcoin funds for high net worth clients. This screams mainstream adoption to me.
Crypto Stocks are here to stay and have the upside to give outstanding returns in the immediate short term and over the next 10 years. Measure your risk tolerance, and if you are not convinced that Bitcoin is the future, I wouldn’t be investing more money than you can’t stomach. 30% drops aren’t that uncommon in the crypto ecosystem. Not having exposure to either Bitcoin or Crypto stocks in your portfolio is irresponsible. Even if you invest 10% of your portfolio into