2020 has been an exciting year for crypto investors and miners alike. With the COVID pandemic, rising geopolitical tension and a looming economic crisis, investors have been sent scrambling for cover.
In the US, the optimism buoyed by strong market performance has been tampered by uncertainty with the upcoming November 2020 presidential election. Meanwhile over in Europe, the Belarus crisis has stirred up fears of Russian aggression in the days to come.
A combination of geopolitical tensions and fears of a massive economic slowdown have all worked to place upwards pressure on Bitcoin and a selection of other cryptocurrencies.
Having broken the psychological $10,000 barrier, enthusiasts predict a continual bull-run for BTC in the heady days to come.
With all of this in mind, we ask the important question; is now the right time to start investing in cryptocurrencies?
1. Cryptocurrencies as a store of value
With economies worldwide struggling to stay afloat, governments have introduced stimulus packages in an effort to encourage economic activity. Injecting liquidity into the economy has always been the standard government response to a faltering economy.
However, such monetary policies do have their fair share of weaknesses. As we can see, the COVID pandemic has exposed the many weaknesses of today’s economy. Excessive reliance on globalization has resulted in millions of jobs being lost as consumption worldwide falls drastically.
In response, the Fed and other monetary authorities worldwide have printed record amounts of cash. Doing so allows the government to issue additional debt to keep businesses afloat and jobs intact. It is clear that most countries are looking to spend their way out of the crisis.
On the long-term, this will undoubtedly lead to inflation i.e. a situation where excessive amounts of cash are chasing only a limited quantity of goods and services.
This could be one of the reasons why cryptocurrencies have seen a tremendous uptick. Investors looking to hedge the value of their investments have turned to cryptocurrencies. The fact that the supply of Bitcoin remains constant is one such factor.
As they are essentially immune to inflation, Bitcoins are an excellent store of value. Something which makes them useful to investors looking to avoid value fluctuations in their investments.
2. Cryptocurrencies are an independent alternative investment
Unlike other investments, one major advantage that crypto has over other investments is their independence. As cryptocurrencies are unregulated i.e., they are unaffected by monetary and government policies.
Compared to the USD or RMB, a sudden spike in geopolitical tensions is unlikely to affect the price of cryptocurrencies. Ironically, given the lackluster response of governments worldwide to the COVID crisis, some have chosen to snap up cryptocurrencies as a failsafe.
Thus, making the case for why Bitcoin and other cryptocurrencies are a relatively good buy in today’s market environment. With higher certainty than going on TwinSpires.com odds and betting on a dark horse to win the Kentucky Derby, Bitcoin is a bet on the future.
3.Bitcoins can be quickly liquidated
The traditional investments of yesterday have little to no bearing on today’s economy. Liquidity instead has become the new name of the game. Being able to quickly liquidate an asset allows one to quickly change up a portfolio to take advantage of any new opportunities.
With a strong and relatively stable secondary market, Bitcoin can be easily liquidated and converted into other forms of assets. Thus, making it a popular choice for inventors on the lookout for something flexible.
As an added benefit, increased mainstream acceptance of Bitcoin means that merchants around the world are more than happy to accept payments in Bitcoin. With online shopping and social distancing becoming the new norm, this is just one more reason why Bitcoin is a great investment.
With increased economic uncertainty and the widening trust deficit between governments and its citizens, we can say with confidence that the future of cryptocurrencies is indeed a bright one.
Guest post published by Wealth Growth Insights have sent by companies or their representatives. Wealth Growth Insights is not part of any of these agencies, projects or platforms. At Wealth Growth Insights we do not give investment advice and encourage our readers to do their own research.
