For a long time, cryptocurrencies were mainly known to computer nerds, but after some turbulence, they are now also exciting for traditional investors. 5 reasons.
- Crypto investments: from nerd stuff to hype
- 5 reasons why Bitcoin & Co are also interesting for traditional investors
- Conclusion: Crypto investments are on the rise
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Crypto investments: from nerd stuff to hype
Before Bitcoin and Co. started to soar in 2021, it was more of a thing for computer nerds. The Bitcoin, the first cryptocurrency of the World, already in 2007 as decentralized Alternatives been invented to fiat currencies.
However, the deep fall in 2022 made cryptocurrencies as system -Vehicle uninteresting for traditional investors: Highly speculative and far too volatile, that was the devastating verdict. A trend reversal can now be observed and there are good reasons for this.
5 reasons why Bitcoin & Co are also interesting for traditional investors
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I speak to many investors and see an increasing demand for solid and professionally designed crypto and blockchain investments. In many conversations I have identified the following 5 reasons for the change of direction:
1. Better use cases of new crypto and blockchain projects
Bitcoin had to move away from the nicheProjects to the mainstream, and to the most popular and well-known cryptocurrency, and has also benefited from the increasing number of acceptance points: Initially, it was only known among absolute computer nerds and was extremely difficult to obtain. In the meantime, even the first banks are offering theirs customers ways to acquire the most popular cryptocurrency. El Salvador was the first country in the world to introduce Bitcoin as an official means of payment, in Switzerland you have been able to have yours in the canton of Zug for 2 years Taxes Pay in Bitcoin or Ether and VISA also integrated Bitcoin into their payment network in 2021.
NFTs, non-fungible tokens, which are among the best-known blockchain products, are now taking a similar path.
They appeared for the first time in the digital sector Artto regulate property in the digital space. After an enormous hype in the summer of 2021, the euphoria has now pretty much leveled off, but promising projects are also emerging worldwide in this area, which differ from the 1st generation primarily in one thing: a real benefit. So there is now not only tokenized music, where the artists release their singles and albums as NFTs and sell, but also NFTs backed by real assets.
In both cases is a real benefit clear recognizable and comprehensible, which means that these projects are also becoming increasingly interesting for investors. Because what has a use, or a Problem solves, there is demand – and profits result from increased demand.
2. Easier traceability of blockchain business models
The clear benefit also means that projects are easier to explain and easier to understand. Analogous to Warren Buffett's principle "Buy stocks whose business model you understand", the increasingly comprehensible business models and areas of application also contribute to the fact that more and more investors are interested in investments in crypto and blockchain projects.
If digital art still seemed abstract and not tangible enough, you can now very well understand that it is interesting not only to own a digital image, but also to own a part of a real, physically existing artistic masterpiece.
When it comes to cryptocurrencies, many are now even making comparisons to stocks: many currencies spiegeln meanwhile reflect the state of the company and rise or fall due to the company's success. This transparency and traceability offers traditional investors security and certainty and makes investments increasingly interesting and attractive.
3. High potential of a still young asset class
In addition to the reasons mentioned above, investors always have an eye on the return. Cryptocurrencies, and blockchain projects in particular, are still in their early stages of development, but are striving more and more towards the mainstream, as shown above.
Many investors see the enormous potential of this still young asset class, so cryptocurrencies currently have a market capitalization of less than USD 1 trillion, which means there is plenty of room for growth offers and ideal opportunities for a potentially high return.
The security and transparency of the blockchainTechnology is considered promising and many investors want to position themselves for the future. They hope for another facebook or Amazon and definitely don't want to miss out on this development.
4. Addition in a balanced portfolio
"Those who diversify broadly don't slip up" is a widespread credo among investors. Therefore, in a well-diversified portfolio, many investors also consider crypto and blockchain investments. And not just because of the great potential that many believe this new technology has:
Cryptocurrencies in particular are an interesting phenomenon so far in terms of their performance and correlation: While they don't offer the ultimate protection against inflation that they were once credited with, they still appear to be performing differently than fiat currencies It turns out that bitcoin does not correlate with consumer goods inflation like fiat currencies, but – like other asset classes – with asset price inflation. A phenomenon that can definitely accommodate investors who want to protect themselves.
5. Institutional investors and large companies as role models
Many traditional investors are hesitant when it comes to new technologies and business models. But as soon as they notice that blockchain projects are developing from the niche to the mainstream, they, too, increasingly grasp it trust, become curious and want invest.
The developments in this area are enormous: More and more family offices, hedge funds and also foundations invest in cryptocurrencies and like to use this as a Marketing outwards to emphasize how modern and future-oriented they are.
In addition, more and more occur Corporate the journey into the Metaverse, like Adidas, Gucci or VW recently. Here, too, the signal effect is clearly noticeable: If "traditional companies", like the ones just mentioned, think blockchain projects are good, they want to too Private- Investors to be there.
Conclusion: Crypto investments are on the rise
As more crypto and blockchain projects enter the mainstream, traditional investors are becoming more interested in these investment opportunities.
In addition to better use cases and the resulting easier comprehensibility of the business models, the increasing acceptance by institutional investors and large companies is also contributing to increased demand from traditional investors.
Security-conscious investors rely on broadly diversified portfolios, in which blockchain and crypto projects should not be missing due to their enormous potential.
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