Wells Fargo: Investing in Crypto Today Resembles ‘Early Days of the 1850’s Gold Rush’
Wells Fargo has devoted a section to Bitcoin and cryptocurrencies in its latest investment strategy memo. The banking giant now realizes that digital assets are not just a fad. The article reads,
“Over the past 12 years, they have risen from literally nothing to $560 billion in market capitalization. Fads don’t typically last 12 years.”
The section Real Assets covered by John LaForge, Head of Real Asset Strategy, noted that cryptocurrency is still “more speculating than investing,” said, “that could change.”
Noting Bitcoin as the 2020’s best performing and most volatile asset, the memo says Wells Fargo will be discussing the digital asset space more next year and cover the upsides and downsides. LaForge describes it as,
“2020 has been a wild and crazy year, so it only fits that the best-performing asset group in 2020 has the craziest-sounding name — cryptocurrencies.”
For now, Bitcoin is the centerpiece with its 170% run-up this year on top of the 90% uptrend in 2019.
The article notes that the entire cryptocurrency is worth only about $560 billion, which is just about one-fourth of the S&P 500 technology company's size that has the largest market capitalization.
But, keeping to its skepticism, Wells Fargo doesn't want its users to feel left out of the craziness because while “most investors have heard of cryptocurrencies… few have ever bought or used one.” Although they attract a lot of attention, “not necessarily lots of investment money.”
Despite Bitcoin outperforming the S&P 500 and gold over the last three years, LaForge is compelled to point out the volatility that “bitcoin investors had to endure to get there,” so, according to him, “if you feel left out of the gains, don’t.”
Great advice from Wells Fargo indeed! What is even over 520% return on investment in just two years just by HODLing. Not to mention, the digital asset's volatility has been declining, recording less than the S&P 500 in 2020.
But keeping with the theme of the 2020, even the banking giant can’t help but point out how Bitcoin is looking like gold.
“Cryptocurrency investing today is a bit like living in the early days of the 1850’s gold rush, which involved more speculating than investing,” which could become “investment-worthy one day, though.”