The Rise and Rise of Crypto currency
Once considered an outcast in the financial markets, but in recent times has grown to hard to ignore. Crypto currencies in general have outperformed most if not all major markets, you can see below the 12 months return of Bitcoin when compared to the S&P 500, the NZX50 and even gold. These are the returns investors dream of, so is it too good to be true? While historic returns don’t equal future gains, it is not hard to see why it seems everyone is talking crypto.
But what exactly is it, what is driving the prices – and is it worth investing? Crypto currency is a completely digital asset, designed to act as a medium of exchange, ownership is stored in a computerized database. Bitcoin the first player in the space first came about in 2009. Since then, there has been a huge increase in the number of currencies – estimated at now over 4000.
So what is causing the price rises? Well Hype is a factor you can’t ignore, it seems everyone is talking about it, and basic economics show that increase in demand leads to an increase in price. The other major shift, is the actual buyer. What was once an outside investment left to the early adopters, is now being purchased by institutional asset managers. This is important for the long-term success of crypto, reducing the reliance on retail investors should create greater stability and bring the asset to the main stream. For example Bitcoin could become a store of wealth, equal to that of gold, however with its current Market cap, it is very early to say. (Bitcoins Market cap is just 600 Billion USD – Compared to gold which is estimated at $10.6 Trillion)
So how does someone buy it, and should I be invested?
Like every single investment, there are risks. With Crypto currency, even through it is trending in the right direction, we still place it on the highest end of our risk scale. This is because it is still very immature in terms of a long-term asset class, this reflects in its price instability.
But, depending on your individual circumstance, this may suit you.
In New Zealand, a new offer has been released called Crossgate Capital, solely investing in Crypto Currency, This is the first of its kind here in New Zealand which allows retail investors, with minimum investments starting at just $100. The offer is brought to market by an experienced management team, who have held Directorships in both public and private entities. As such, they have a strong understanding of the financial sector and the regulatory landscape.
You can find more information here: https://www.crossgatecapital.co.nz/ From our point of view, investing in a fund, with experienced managers is a massive benefit, especially in a market such as crypto, which is complex and over crowded with information, this is by far the most streamlined way into the market. You also gain diversity across a number of currencies, not achievable for a single investor.
If you are interested in finding out more about Crossgate capital as an investment vehicle, reach out to one of our Advisors. Investing in a market like Crypto is high risk, and should only be done if you truly understand the market.
Disclaimer: This publication has been prepared for your general information. While all care has been taken in the preparation of this publication, no warranty is given as to the accuracy of the information and no responsibility is taken for any errors or omissions. This publication does not constitute financial or insurance product advice. It may not be relevant to individual circumstances. Nothing in this publication is, or should be taken as, an offer, invitation, or recommendation to buy, sell, or retain any investment in or make any deposit with any person. You should seek professional advice before taking any action in relation to the matters dealt within this publication. Disclosure statements relating to any financial advisers associated with this newsletter are available on request and free of charge. Tribe Financial is no way related to any entities discussed in this publication.