As the value of the dollar decreases with rising inflation, investors are balancing their portfolios and diversifying with more economical assets. In a vast digital world where consumers can buy anything online in a matter of seconds, it makes sense to invest in a transformative technology that is revolutionizing multiple industries. 

As technology advances, more Gen X individuals are going digital with the cryptographic electronic money referred to as cryptocurrency. This year, it’s reported that at least one in four Gen Z, Millennials, and Gen X invest in “crypto.” 

A Greeneville, TN, financial advisor at Sapiat can help you understand the benefits of investing in digital assets.

This exciting currency has the potential to transmute global banking for the better. If you’re wondering if cryptocurrency is a viable asset, we definitely believe it has a place in a diversified investment portfolio, as outlined in this article.

What is Cryptocurrency?

Cryptocurrency is an entirely digital currency taking the world by storm, made up of an encrypted data string that denotes a unit of currency. Since it does not exist in the physical realm, it cannot be seized or printed, providing a safe store of value. 

It helps for crypto investors to understand the brief timeline to show its active growth and trends: 

• 1980 – 2009 marks the pre-Bitcoin era.
• 2009 – 2010, Bitcoin was born (created by “Satoshi Nakamoto”), which opened the virtual doors for more digital coins to follow, such as Litecoin, Tether, and Monero.
• 2011 – is considered the rise of alternative coins.
• 2012 – WordPress accepted Bitcoin as payment, the first large accepting retailer.
• 2013 – 2014 Bitcoin prices fell and rose.
• 2016 – Ethereum became the most notable Bitcoin alternative.
• 2018 – Cryptocurrencies declined in value.
• 2019 – Facebook announced the launch of Libra.
• As of March 2022, cryptocurrencies grew to a market capitalization in excess of 2 Trillion dollars.

Transactions for crypto are also digital, carried on a secure distributed ledger known as blockchain. People who purchase cryptocurrency are given access digitally through a digital private key or a digital wallet. These provide secure access to your coins which you can sell or use for purchases.

You can purchase cryptocurrency through an exchange. However, It’s best to discuss the details of these asset investments with a financial advisor who understands them well versus the DIY method.

Is it a Good Idea to Invest in Cryptocurrency?

Like investing in stocks, bonds, and real estate, crypto investing has a few things to consider. Here’s a brief rundown to help you figure out when and how to invest for yourself.

There are many benefits of investing in cryptocurrency.

Cryptocurrency has the potential for significant price appreciation. Digital currency has enjoyed periods of substantial price run-ups in its history. For example, the first and still one of the most widely used crypto, Bitcoin, was trading at $7,000 in late 2019; in October 2021, it had soared to $45,000. 

The increasingly widespread use of cryptocurrency makes it an attractive asset class. More and more companies will accept crypto in exchange for goods and services: Home Depot, Microsoft, and AT&T are just three. Even more significantly for investors, perhaps, an increasing number of corporate treasuries, such as Tesla, are investing in significant amounts of cryptocurrency for their own coffers.

Both points one and two are interrelated. Many observers feel that the more widely accepted cryptocurrency becomes as a currency and as an investment, the more the price will rise. Crypto enthusiasts believe that digital currency is the future of banking. 

If they’re correct, early investors in the right cryptos could be sitting on a gold mine — just like early investors in Apple, Microsoft, or Amazon (prominent technology leaders).

Cryptocurrency contains the word “crypto” because all transactions through blockchain are encrypted, which creates enhanced security. Blockchain security is greater than that of financial institutions like banks and more significant than physical assets.

Another benefit is flexibility and reach. While cryptocurrency is not yet accepted everywhere, you can purchase and move the currency flexibly and quickly everywhere it is accepted.

Read: What to Know Before Adding Crypto to Your Retirement Savings Plan

Even though crypto is volatile in nature, like many other assets, the potential for great appreciation is very real, as trends prove. If you’re just beginning your cryptocurrency investing career, we recommend staying educated about the crypto world in relation to the financial industry. Most importantly, work with your financial advisor to balance your portfolio thoughtfully with this digital asset.

Read: What is the Best Cryptocurrency to Invest In?

Is Cryptocurrency for You? 

We handle cryptocurrency with our investors the same way we handle other potentially high-return, high-risk investments—through research and careful management. Investing in a cryptocurrency can potentially be lucrative for the risk-tolerant. 

To manage the potential risk, the general rule of thumb is no more than 5% of your liquid net worth is invested in cryptocurrency. We make special exceptions for business owners since they have a large percentage of their net worth invested in their business.

The most important thing to remember is that your investment percentage will be based on your risk tolerance and time horizon, which we can help determine for you. Are you ready to explore building wealth with cryptocurrency?

How You Benefit

In 2022, nearly 25% of small businesses in nine countries worldwide, including the U.S., plan to accept digital coins as a form of payment. 13% of consumers in those countries look forward to retail stores beginning to offer crypto payments, per Visa Inc. This trend kicked off with Wholefoods, Microsoft, Starbucks, and Etsy—early adopters of crypto in 2021 by accepting Bitcoin.

Will you become a digital asset investor as they continue to expand?

Sapiat Asset Management, LLC is dedicated to helping our clients navigate through the financial challenges of life. We provide comprehensive financial planning, which includes access to investing in digital assets. We have invested the time and money into training ourselves about blockchain and digital assets. In fact, our CERTIFIED FINANCIAL PLANNER™ Professional is also Certified in Blockchain and Digital Assets by DACFP and NASDAQ Advisor Academy.

Ready to discuss your financial goals? We look forward to answering your questions!

If you’re trying to decide if cryptocurrency is a good investment for you, let’s talk. 

Contact us for an appointment to discuss your portfolio and work on crafting a more diverse and prosperous financial future together. 

Sapiat Asset Management is a Fee-Only, Independent, Registered Investment Advisor (RIA), specializing in goal-oriented financial planning and investment management for Gen X Individuals & Families, their Businesses, & the Trusts that benefit them and their heirs.