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Do you need bitcoin in your investment portfolio?

By Guardian Nigeria
23 February 2022   |   1:33 pm
You’ve probably read many articles or research papers about the benefits of including alternative assets to your traditional portfolio, containing bonds and stocks. Today, cryptocurrencies are an alternative investment for many investors. These digital currencies have drawn attention from investors and the media alike.

(FILES) In this file photo taken on December 17, 2020 shows shows a physical imitation of a Bitcoin at a crypto currency “Bitcoin Change” shop, near Grand Bazaar, in Istanbul. – Bitcoin soared above $50,000 for the first time on February 16, 2021, after surging by almost 75 percent this year as heavyweight companies lend their support to the world’s most popular virtual currency. At around 1235 GMT, bitcoin hit an all-time high at $50,547.70, a 4.4-percent gain since Monday. (Photo by Ozan KOSE / AFP)

You’ve probably read many articles or research papers about the benefits of including alternative assets to your traditional portfolio, containing bonds and stocks. Today, cryptocurrencies are an alternative investment for many investors. These digital currencies have drawn attention from investors and the media alike.

But some people don’t know the benefits of adding these digital assets to their investment portfolio. Perhaps, you know that you can purchase a digital currency like Ethereum, Digital Yuan on a platform like the Yuan Pay Group. This platform allows people and institutions to register and buy this digital currency with fiat money or other cryptocurrencies. Perhaps, you can visit the Yuan Pay Group for more details.

Currently, the internet is awash with crypto exchanges where people purchase and sell Bitcoins and altcoins. But should you visit these platforms to buy Bitcoin and include it in your investment portfolio?

Understand Bitcoin First
Please don’t rush to purchase Bitcoin because everyone else is doing it. Instead, understand what it is and how it functions to be content owning it. Most investment experts recommend understanding an asset before spending money on it. In 2008, Satoshi Nakamoto mentioned Bitcoin in a whitepaper. Satoshi described Bitcoin as a currency on the blockchain technology in this whitepaper. This virtual currency would depend on miners, digital signatures, and tokens rather than a centralized government.

Thus, Bitcoin would allow people to transact online without financial institutions like banks. Today, Bitcoin is a popular alternative to fiat money and an asset. But Bitcoin has gained massive popularity and value as an asset. While its price is volatile, it has increased over the years of its existence. And Bitcoin’s limited supply means its value will keep growing. Therefore, some investors add Bitcoin to their portfolio, hoping its value will increase when miners generate all the 21 million tokens.

Decide Why You Need Bitcoin in Your Portfolio
Why do you want to include Bitcoin in your investment portfolio? Is a genuine belief that Bitcoin is a viable asset the reason for buying it? Do you think blockchain technology has technological merit worthy of your consideration? Maybe you’re investing in Bitcoin because everybody is talking about it.

If you want to buy Bitcoin because it’s the talk of the town, don’t waste your money. Also, don’t rush to purchase this virtual asset due to the fear of missing out. Instead, take the time to know why experts recommend adding Bitcoin to an investment portfolio.

Decide Whether You Can Tolerate Volatility
Bitcoin is a very volatile digital asset, a barrier for many investors. Many investment advisors see Bitcoin as a risky asset due to its volatility. However, some people prefer Bitcoin because its volatility lets them maximize returns by selling their holdings at the peak price.

Nevertheless, Bitcoin volatility is not for the faint-hearted. If you can’t withstand sharp price swings within short timeframes, don’t invest in Bitcoin. But if you enjoy the adrenaline moves that come with a volatile market, consider adding Bitcoin to your investment portfolio.

Should You Include Bitcoin in Your Portfolio?
Like most investments, consider all risks of investing in Bitcoin before adding it to your portfolio. Bitcoin and altcoins have a relatively young industry. That means stabilizing this market will take time. In 2021, Bitcoin’s price moved from the US $30,000 to US 65,000 in 2021. Such statistics reveal Bitcoin’s volatility to prepare for when investing in this cryptocurrency.

Nevertheless, a young industry is not always risky because cryptocurrency has significant growth potential. What’s more, institutional investors and technological advancements are entering the crypto space. Therefore, consider the above factors in deciding whether to add Bitcoin to your investment portfolio.

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