Cryptocurrency as an alternative investment option

Before 2017, digital coins investments were relatively unknown to the wider market and were accessed by a small group of speculative investors. Today, we can see that this is changing, and large institutions are looking at crypto-assets as potential avenues of investment. Bitcoin futures (BTC) have been available to traders for nearly one year through the CME Group. Goldman Sachs announced early November, that they started signing up a “small number of clients” for their new Bitcoin trading products. Nasdaq is planning to launch cryptocurrency products as early as 2019, which will provide investors with a centralized marketplace.

How will this affect the cryptocurrency market?

Regulation could have a tremendous positive impact on the cryptocurrency economy. Increased regulations can produce more stability in the market. Together with blockchain technology, which already provides high levels of transparency across transactions, regulative measures can reduce the risk of fraud in the crypto-space and increase investors confidence. With big institutions rolling out plans to enter the crypto market and the introduction of regulatory requirements, as it is happening now, we can expect an increase in adoption of cryptocurrency as an alternative investment option.

Stock market vs cryptocurrency trading

The stock market provides a more regulated environment where listed companies are regularly audited whilst they remain listed. This enables people to invest in established companies with a proven trading history. Exchange systems and regulations provide a relatively reliable and secure market place.

Many people choose to invest in shares by buying today and sell in the future at a higher price, cryptocurrency trading is no different. However, some investors choose slightly more complex financial instruments, these may include Options, CFDs, or Futures to hedge their investment potential losses, and to have more flexibility in their trading.

Cryptocurrency trading is a growing market, it now provides hedging options and flexibility just as the traditional stock market does, and it can be a choice of alternative investment. As the crypto market matures, hedging options are also on the rise. Crypto investors can offset their losses by hedging their crypto investments using instruments like futures. The Chicago Board Options Exchange and the CME (Chicago Mercantile Exchange) control one of the largest derivative market. Alternative low transaction cost instruments are pegged assets, which are backed by a real security like fiat currencies or gold and silver.

To make a profit on traditional stock markets can be complex and can take considerable time; starting up with regular trading requires substantial personal information and sometimes larger deposits, and brokers are necessary just to place an initial trade. Moreover, profit margins between regular stock and crypto market are significantly different. Cryptocurrencies are highly volatile compared to the traditional stock market, which produces large fluctuations in the value of the assets, and a potential investment alternative for generating higher profits. However, there are also much higher risks associated with volatility.

As of today the cryptocurrency market is still relatively unregulated, and it is easier to start trading crypto. Less capital is required to generate potential profits, the processes involved to sign up are way less restrictive, easier and no middle men are required. Cryptocurrencies can be traded from just about anywhere in the world as long as an Internet connection is established, which makes cryptocurrency one of the most flexible investment option available today.

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