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“Bitcoin is like a risky tech stock”

August 12, 2020

Bitcoin behaves more like a tech startup than digital gold;; Investors benefit hugely when it works, but may lose everything if the crypto asset fails.

This is the result of a report by the digital asset manager CoinShares dated August 10, entitled “A little bit of bitcoin goes a long way”. In it the authors James Butterfill and Christopher Bendiksen They argue that the fact that Bitcoin (BTC) was launched “at zero price” gave it an excellent reputation.

“If it reaches its potential, the value could be immense” The report says.

“At the same time, there is a non-zero chance that it will fail completely and the value of Bitcoin will stay close to zero.”

“Bitcoin is like a risky tech stock”“Bitcoin is like a risky tech stock”

Unlike many experts who suggest reserving 1% of a portfolio for cryptocurrencies, CoinShares suggested that investors should allocate “just under 4%” to Bitcoin alone.

The company tested Bitcoin as a reliable store of value by examining the performance of the cryptocurrency as part of a balanced 60/40 portfolio. Your analysis showed that The token improved annualized returns by 9.7% compared to 2015, almost double that of comparable assets.

Begin to mature in the store of values

Acting like a tech stock isn’t a bad thing. Tech stocks have gained tremendous traction since the cryptocurrency carnage in March. Amazon’s price rose 70.7% to $ 3,170, Apple increased 63.3% to $ 450, Facebook increased 54.5% to $ 263, and Google increased 23.6% to $ 1,496.

The report follows a period of volatility as Bitcoin tests the $ 12,000 threshold for the first time since 2019.

“”Bitcoin is an asset to begin with“says the Coinshares report.”As Bitcoin matures, its robustness continues to be demonstrated, and the risk of failure continues to descend from zero.. We believe investors will start treating it differently, causing its macroeconomic behavior to follow suit. “

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