It was only a few years ago when the word “BitCoin” was something thrown around only on forums in certain recesses of the internet. At that time, nobody could have predicted the impact it would end up having on the global market.
The world was in awe at the end of 2017 when the popularity, and conversion rate, of BitCoin and its host of alternatives, reached their peak. People’s lives were changed forever by the rise of cryptocurrency, but nobody knew whether it had any staying power. According to an article by Medium, the sudden and dramatic bear market cryptocurrency faced in 2018 after hitting its high watermark was enough to validate the fears of many who claimed that investing in cryptocurrency was a waste of shareholder money. The idea of a widely-accepted, easy to use, decentralized currency was enough for many investors and cryptocurrency enthusiasts to remain confident in the technology while it stabilized.
By and large, investors still have plenty of confidence in cryptocurrency as a critical new element in a properly diversified portfolio, holding that it serves a similar role in such a portfolio as investing in gold or other precious metals. The idea of such an investment, known as a ‘safe haven’ asset, is to have some invested funds completely detached in value from the fiat currencies backed by national economies. In essence, cryptocurrency is seen as a type of gold that can be held and transferred instantly and remotely. This allows investors to manage unexpected fluctuations in the total value of their portfolio as a result of inflation.
Support for cryptocurrency among investors may still have footing, but the fact remains that cryptocurrency is a demonstratively volatile marketplace, and this volatility makes centralized banking agencies wary. The ability for citizens to easily dislocate assets from a national economy has nations like China, India, and Venezuela taking measures to regulate, create their own, and even outlaw the purchase and trade of cryptocurrencies within their borders.
It seems that, at least for now, cryptocurrency has found a stable niche in the investment world acting as a small but forceful counterplay to traditional markets and assets, but whether or not it will stay in that position long-term is yet to be seen.