Bitcoin Will Collapse, Wealth Planner Warns against Buying Cryptocurrencies
- This week Bitcoin price surged as much as 14% before taking a hit and going back to $8,300.
Top altcoins like Ethereum (6%), XRP (9%), EOS (5.42%), BNB (10%), Stellar (5.35%), Tron (10.37%), Link (37.37%), Maker (16.59%), and Bat (17.69%) have also taken a good hike in the past 7 days, as per Coincodex.
Despite this positive movement in cryptocurrency’s prices, a wealth planner warns that investing in digital assets is not a good idea.
“What we’re going to see, most likely, is, we’re going to see cryptocurrencies collapse,”
Peter Mallouk, a certified financial planner and president of wealth management firm Creative Planning, told CNBC.
“It’s Not a Real Investment. It’s Speculation”
He talks about how a plethora of crypto assets have entered the market but “there’s no way that even a fraction of them can survive,” the news channel quoted him as saying.
Mallouk, who has written several books on investing and planning, advocates for investing in traditional markets like stocks, bonds, and real estate instead.
However, he doesn't completely disregard the possibility that some of these digital assets will survive. The problem he says is that in the meantime, the virtual currencies will not reap any income.
“Is it possible that maybe one or two will work out in the future? Sure it is … In the meantime, if you buy cryptocurrency, you get no income. It’s not a real investment. It’s speculation,”
It is true for Bitcoin, as Fundstrat’s Tom Lee has pointed out, that 10 days represents the leading cryptocurrency’s entire year returns and the rest of the days, Bitcoin has been down 25% per year.
But the same is the case for the S&P 500 where if an investor doesn’t hold stocks through its 10 best days, the annualized return would drop from 9.2% to 5.4%.
As such, with Bitcoin, it’s all about HODLing.
Bitcoin is the Best Performing Asset
Interestingly, Bitcoin has also been the best performing asset for the last 5 years beating the traditional options like S&P 500, bonds, and gold.
A recent report on the Investment case for Bitcoin by VanEck also pointed out that Bitcoin enhances the risk and reward profile of investment portfolios.
As a matter of fact,
“a small allocation to bitcoin significantly enhanced the cumulative return of a 60% equity and 40% bonds portfolio allocation mix while only minimally impacting its volatility.”
While the first bull rally saw BTC price surging 13,000%, the second one registered a hike of 12,000%.
These numbers clearly point out that Bitcoin is a better investment option than any other asset class.
When it comes to altcoins, though they saw huge returns during the last bull cycle, it is yet to be seen how they will fair this time.
As for survival, industry commentators has also time and again stated that not all cryptocurrencies will emerge as the survivors. Just as we saw during the dot-com bubble, while 99% of the stock disappeared, a few went to a $1 trillion market cap, crypto market could see a few winners leading the market.