Bitcoin and Beyond: The Future of Cryptocurrency Investing
Bitcoin was launched in 2009. It became the first cryptocurrency ever. Now, we have thousands of other digital coins that run on different blockchains and provide different possibilities to their holders. The spread of cryptocurrencies made them attractive to investors.
These days, investors can find numerous cryptocurrencies, even meme coins such as Dogecoin and Shiba Inu (https://primexbt.com/for-traders/is-shiba-inu-a-good-investment/). Many of them have gained loyal communities and become mainstream products thanks to celebrities and companies that start accepting them as payment methods.
These are current tendencies. But when it comes to investing, we have to consider what the future will be. Can we estimate the future of cryptocurrency investing?
New preferences of industrial investors
Until recently, Bitcoin has been the main asset for industrial crypto investors. Experts in the market estimate that this tendency is changing right now. Industrial investors have started making token investments. The biggest investment funds have started switching to crypto assets beyond Bitcoin.
Despite the fact that this tendency among investment funds is quite obvious to experts, they still specify that no more than 1% is allocated to crypto investments, while the biggest part is taken by Bitcoin. Nevertheless, some investment funds become better exposed to other crypto assets and this trend will continue developing in the future.
According to specialists, industrial investors put small amounts into other cryptocurrencies just to explore this market better. They cannot afford to invest in some no-name tokens, so Bitcoin and Ether remain the most popular crypto investment options.
Why is this so? The answer is prosaic – Bitcoin has been considered the safest digital asset. “Digital gold” was also believed to be one of the most effective hedging instruments against inflation. Additionally, there are no regulatory risks for Bitcoin. Nonetheless, the tendencies are changing right now and institutions start considering smaller projects for their investments. Experts say that DeFi tokens are gaining popularity among industrial investors. They start allocating their funds to ETH, SOL, ATOM, and other promising projects.
What’s interesting to highlight is that this interest in cryptocurrencies is quite new. Institutional investors didn’t consider digital money as a sustainable investment option until 2019. The attention to cryptocurrencies was caused by the global financial crises that took place during the most severe period of the coronavirus pandemic. This was the time when crypto started gaining popularity and becoming more legit in the eyes of industrial investors. Besides, this was the period when many explored the technology of coins that run on decentralized protocols.
The future of stablecoins
Stablecoins are quite popular investment options for those who are looking for less volatile digital assets. Stablecoins are the ones that remain on a stable level thanks to pegging to fiat currencies. USDT and USDC are the biggest cryptocurrencies backed by the US dollar.
However, many experts doubt whether stablecoins will remain the same popularity in the future. Central bank digital currencies (CBDC) can soon challenge them. These are assets issued by central banks of the countries in the virtual form. Central bank digital currencies have all the prospects to substitute cash. Such experiments are already being conducted by central banks in many countries.
Why will CBDCs challenge stablecoins? Central banks control the world’s economy and they are unlikely to allow financial assets that they cannot control. Governments cannot control the decentralized ecosystems of stablecoins so they are more likely to pay favor to CBDCs.
Bitcoin will keep leading the market
Experts say that despite all these tendencies that are expected to occur in the crypto market in the future, Bitcoin is unlikely to lose its leading position. This is the biggest cryptocurrency by market capitalization, so investors won’t lose their interest in BTC.
Bitcoin is often referred to as an index fund of the cryptocurrency market. This means that you can always consider investing in Bitcoin if there’s no favorable option in the crypto market at the moment.
Bitcoin will keep leading this market because thanks to its scalability, it’s the most decentralized project that has ever existed in this industry. Throughout all these years, since the date of its launch in 2009, Bitcoin has been working without glitches and other major technical issues. Experts also noted, that in many cases, during the crisis periods, Bitcoin appeared to be more stable than some reserve fiat currencies.
The bottom line
In the end, it’s difficult to make a clear estimation of the cryptocurrency investing future. Digital coins are highly speculative assets that don’t have a long history based on which we can make cohesive forecasts. No one really knows what will happen to Bitcoin and other cryptocurrencies in the future. They might become either the only payment methods we’ll use or get completely banned by national governments and lose their value.
The future is unclear, so if you make crypto investments, consider adding other financial products to your investment portfolio. Crypto investments should be diversified and shouldn’t take the biggest part of your portfolio. This is the axiom that will stay relevant in the future as well.
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