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Cryptocurrency Investing

You may have heard on the news and read about cryptocurrencies and about bitcoin. So, what is cryptocurrency investing? Investing and trading cryptocurrencies is somewhat different than investing in financial assets such as stocks and bonds. However, there are some similarities in this asset class to your traditional investments.


There continues to be confusion and misconceptions about cryptocurrencies. In a nutshell, investing in cryptocurrencies entail the following:


1. There are over two-thousand cryptocurrencies available today including the popular bitcoin. The number is likely to increase in the future as investors become familiar with this product.


2. Cryptocurrency is a blend between a currency and a digital financial asset. Like the US dollar, you can use it to pay for the purchase of products and services, albeit currently heavily skewed toward digital-related ones. Major retailers have begun to accept bitcoin. Since 2014, Microsoft has allowed bitcoin for use in its online Xbox store. Overstock is one of the first shopping websites to accept payments of cryptocurrency. Like a digital asset, you can invest/trade it for short-term or long-term gains.


3. Because cryptocurrency is a digital or virtual currency it is often secured by cryptography or encrypted. It is difficult for someone to counterfeit and is theoretically, hacker-proof.


4. Investing in cryptocurrency is rather new as compared to stocks and bond investing. This financial product is constantly evolving, and as such, can be extremely volatile and can be illiquid.


5. There is different underlying technology (i.e., blockchain), management, and various markets that back the specific cryptocurrencies. It is important for investors and traders to understand the background of the product before investing/trading.


6. Unlike the stock and the bond market, cryptocurrency is tradeable 24-hours a day and 7-days a week.


If you are thinking of investing in cryptocurrencies you have officially become a part of the brave new world of digital investing and to a certain extent contributing to the future success of the digital economy.


Cryptocurrency is once again attracting interests after its historic collapse a few years ago. Today, one of the most popular cryptocurrencies, bitcoin, has rallied sharply gaining 2.66% and in the process, it has broken out of a well-defined trading range. It is now trading at its highest levels in over two months. Many believe the demand for bitcoin and other cryptocurrencies is rising for the same reasons Gold and Silver have surged in recent months. That is traders and investors may be seeking financial alternatives to stocks, cash, and even the US dollar currency.


There are key cryptocurrency indexes available for investors and traders today. However, there remains a lack of exchange-traded funds (ETFs) that are comprised of cryptocurrency-related assets. Nonetheless, the regulators are currently reviewing a few applications for approval. In the meantime, two widely followed related trusts are often used as proxies for digital currencies including the Grayscale Bitcoin Trust (GBTC) and the Grayscale Ethereum Trust (ETHE). Attached we have also listed the year-to-date performances of 15 prominent cryptocurrencies, including Bitcoin (BTCUSD), Ethereum (ETHUSD), Litecoin (LTCUSD), XRP (XRPUSD), Bitcoin Cash (BCHUSD), Monero (XMRUSD), and others.


As with any new financial product, the market for digital assets such as cryptocurrencies continues to expand, and to gain the exposure it is will become an increasingly important part of the global financial markets.


Source: Courtesy of StockCharts.com

Source: Courtesy of StockCharts.com

Source: Courtesy of StockCharts.com

Source: Courtesy of StockCharts.com

Source: Courtesy of StockCharts.com

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