Can digital assets ever be investment-grade?
Ever since the explosion of Bitcoin, investors have been looking for the next big thing in cryptocurrency. Those who missed out on the incredible returns that Bitcoin offered for its initial investors and miners are perpetually searching for the next big thing, so they don’t miss out once again. But — Bitcoin aside — are any other digital assets really investment-grade? Or should investors focus on traditional stocks if they missed the Bitcoin boat?
During a recent episode of The Scoop, NYDIG executive Robert Gutman told listeners that most serious investors he speaks to are only interested in Bitcoin: “100 out of 100 of the last conversations I’ve had with investors seriously looking to allocate, let’s say over 50 million dollars, 100% of those conversations have been about Bitcoin, and 0% of them have been about any other crypto asset.”
But why is that? How did Bitcoin become the market leader in a crowded market of cryptocurrencies? Only rivaled perhaps by Ethereum, but still, it steals the limelight more times than not. Most commentators attribute the phenomenon to market capitalisation, Bitcoin was the first cryptocurrency and rose to fame with its exponential growth. Who wouldn’t want a slice of that pie? The fact that the currency has now been around for a while, may be attractive to investors too: there is now a clear four-year cycle for Bitcoin, which other newer tokens do not have any proof of yet.
Investment-grade cryptocurrencies are a new idea, the thought of traditional investors seeing Bitcoin as a stable enough market to invest in is something that would have been laughable a few years ago. And yet, it seems that the cyclical nature of the currency, and its longevity to date appear to have sealed its place for many investors and their portfolios. As for the other 5,000+ coins, only time will tell if any of them make the grade.
