What is the Best Cryptocurrency to Invest In?
Sort through investing websites, literature, financial news networks, and other mediums dedicated to investing and you may find plenty of discussion about cryptocurrencies.
Bitcoin has clearly emerged as one of the most popular cryptocurrencies. However, Bitcoin might not be the best crypto asset to invest in considering its lofty price.
Our Greeneville, TN fiduciary CERTIFIED FINANCIAL PLANNER™ Professionals are here to help you develop the right comprehensive financial planning strategy. Meet with us to review your unique financial situation and we will help you determine if it is in your financial best interest to add one or several cryptocurrencies to your portfolio.
Cryptocurrencies Extend Beyond Bitcoin
The dynamics and merits of cryptocurrencies are constantly evolving. As of November 2021, in excess of 1,200 cryptocurrencies exist. This number is likely to increase in the months ahead. Add in non-fungible tokens (NFTs) and the number of alternative “new wave” investments increases all the more.
At the moment, most experienced financial planners are not taking NFTs seriously. However, cryptocurrencies may certainly be worthy of investors’ attention.
Crypto has merit largely because of the technology behind the blockchains. Square your focus on cryptocurrencies with viable blockchains and you will whittle down the field to possibly 30-40 potential crypto investing opportunities.
Our fiduciary CERTIFIED FINANCIAL PLANNER™ Professionals in Greeneville, TN are here to narrow down this field, even more, helping you zero in on one or several crypto targets with large market caps, availability on multiple exchanges, and sufficient trading volumes. The operative word in the preceding sentence is “fiduciary”, meaning we owe you, the client, a duty of care when providing financial planning guidance.
An Explanation of Cryptocurrency’s Merits
Cryptocurrency is garnering more attention with each passing day as it qualifies as a disruptor. Investment vehicles that disrupt the status quo have won over both retail and institutional investors since the start of the pandemic. Crypto’s disruptive component is its underlying blockchain.
The blockchain is displacing other forms of transactional security, allowing for private, secure, and infallible transactions without the need for oversight from a centralized body such as the Federal Reserve. Crypto opens the door to the blockchain for conducting business, exchanging stores of value, and also as an investment opportunity.
New applications centered on the blockchain are emerging as time progresses, presenting a seemingly infinite number of investment opportunities for open-minded investors. However, this is a rapidly evolving sector that has the potential to consume your limited time and energy.
Instead of trying to develop a comprehensive understanding of the blockchain and the many different cryptocurrencies, contact Sapiat Asset Management LLC for guidance. We keep our finger on the pulse of the crypto industry to help our clients evaluate crypto investing opportunities and choose one or several that make sense for their investment strategy and financial plan.
Recognize the Risk Posed by Crypto
We consider cryptocurrencies to be speculative investments. Investing based on speculation is not always the most prudent strategy yet some speculative investments can result in exponential growth. If you are interested in adding crypto to your portfolio, don’t move forward until you have discussed the risks with your financial advisor. Once you understand the risk posed by crypto and accept those risks, you will be able to move forward with the purchase of one or multiple cryptocurrencies or decide that cryptocurrency is not the right investment for you.
Part of the risk inherent to cryptoassets is the underlying blockchain. The blockchain is revered as one of the most secure means of transferring value stores without oversight at the federal level. However, the blockchain is still a work in progress. There is the potential for the blockchain to change in unforeseen ways, ultimately affecting the value of cryptoassets in the months and years ahead.
Crypto also has inherent risk as traditional financial analysis methods are not applicable to these alternative value stores. Though there are analytical methods emerging to better evaluate crypto, they are still in development and might not prove completely accurate as time progresses.
Add in the fact that cryptocurrencies trade ‘round the clock across the globe and risk is heightened all the more. The stakes are even higher when you factor in the egregiously high volatility of cryptoasset prices that have the potential to change by 50% or more in a single day.
Tread Lightly With Crypto Investments
If you are risk-averse or skeptical of crypto as a whole, consider dipping your toes into this volatile space rather than diving in headfirst. Crypto prices swing much more than those of stocks, mutual funds, ETFs, and other more traditional investments. There is also the potential for additional regulation at the federal and state levels that could cause crypto values to decline.
The bottom line is no one has any idea as to how this market will take shape. Some argue crypto represents an alternative currency that is inherently illegal. Others insist crypto is more of a technology and unique value store that represents the next evolutionary step in financial technology. The uncertainty about the future of crypto should give you pause.
At most, we recommend investing 5% or less of your liquid assets in cryptocurrencies. An investment in crypto at this level provides exposure to a sector with the potential for exponential growth without subjecting the bulk of your hard-earned money to elevated risk.
Here to Help You Navigate the Crypto Maze
Crypto is inherently complex, largely because the technology behind this emerging investment opportunity, dubbed the blockchain, is difficult to understand. However, many if not all investment advisors throughout the world agree crypto is here to stay. Cryptoassets are becoming a permanent asset class thanks to the underlying blockchain that might one day serve as the basis of digital currency used across the globe.
There is no sense in attempting to develop an intricate understanding of crypto, the blockchains, and the many different digital currencies on your own. The professionals at Sapiat Asset Management LLC are here to help you understand crypto and possibly develop a crypto investing strategy as a component of your overarching comprehensive financial plan.
At Sapiat Asset Management, we use a personalized process to identify the financial and retirement planning strategies that meet the needs of our clients. Our knowledge of your financial situation is a big part of the foundation that drives our relationship with you. Contact us today for a complimentary consultation.