Stock prices have suffered from high volatility for the past few months caused by the domino effect of the COVID-19 pandemic. Investors are becoming more anxious about their investments in the market, triggering a major shift to other profitable options where they can park their money.
Enter: Cryptocurrency
When Bitcoin (BTC) entered the scene back in 2008, people are still too skeptical about converting their money into digital assets. Now, everyone is scrambling to get an ideal position as the market shows a lot of promise despite the economic decline and COVID-19 crisis.
Bitcoin recently hit its all-time-high of almost $20,000 last November 30, a whopping 177% year-to-date gain, and breaking its intraday record in 2017.
So with the continuous increase in demand for cryptocurrencies and the stock market decline in recent months, investors are now asking a crucial question:
Between stocks and cryptocurrencies, which one should investors bet on for the long haul?
Risk Management
Cryptocurrencies and stocks carry their own risks.
The market could crash for many unforeseen reasons; stock prices can plummet in an instant because of bad news. They can also stay unchanged over some time. Companies can go bankrupt tomorrow, and you'd be forced to sell your stock positions regardless of losses.
On the other hand, good-performing companies can improve their profitability over time. Stock prices can soar in a matter of days because of a positive disclosure such as new partnerships, business expansion, and approved licenses. Best of all, stocks have predictors. There are all sorts of guides to understanding the movement of stock prices – which cryptocurrencies lack.
The price of Bitcoin, like any other cryptocurrency, depends on speculations. It is purely based on supply and demand. There are no companies that investors can monitor to predict its price. Its volatility rides on the people's confidence in the market. Therefore, it is prone to severe dips and breakouts.
The good part is that experts forecast Bitcoin to maintain its advancement and bullish performance into 2021. Based on macroeconomics, supply and demand indicators, and technical analysis, Bitcoin is projected to reach around $50,000 target resistance next year.
Weighing risks is one of the most valuable skills investors use to identify which assets to buy. One has to develop such skills to make the most out of each world.
Riding the Trend
Traders believe that riding the trend is a good way to earn money.
If you bought Bitcoin when it first started, it would have cost only $45. Today, you would have more or less $19,000 in your Bitcoin Wallet. In 2009, during the same year Bitcoin was launched, Amazon stocks cost around $274 apiece. If you had bought one share before, you would have gained $3162 today.
So, which investment is wiser?
The market trend, of course, is out of anyone's hands. As we've learned this year, changes can quickly happen, and predicting them is always hard.
On the other hand, passive investors would rather put their faith in the long-term aspect of the market. Even though the market may exhibit inefficiencies at any given point, prices will still balance out over time.
Instead of current prices affect your emotions, it's always better to see things from a long-term perspective. Plus, ample research can always point you in the right direction.
I would pick crypto assets anyday anytime over stocks and other investment avenues. A coin can yield more than 100% in a matter of hours, the volatility makes it the best investment so far.
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