It's difficult to determine if bitcoin (BTC-USD) investors have been good or bad based just on price charts. There has been some respite from a painful November, along with the possibility of a Santa rally.
Furthermore, more market participants are taking seriously the notion that cryptocurrency is here to stay, even though the Thanksgiving table talk may have shifted to prediction markets.
The sharp decline in sentiment bitcoin has fallen over 30% from its most recent highs has served as a stinging reminder of the instability of cryptocurrencies.
Investors must ultimately risk their money in order to drive up values, even if banks and a pro-crypto government have made it simpler for individuals to accept digital currency.
For comparison, the price of gold (GC=F) has increased by over 60% this year. Investors have sought refuge from mounting debt loads, political unpredictability, and the "debasement" of fiat currencies. (Instead, they discovered those enormous profits, literally and figuratively hitting gold.)
Even as a rough metaphor, the optimistic belief that cryptocurrency is the new gold was tested by the two assets' respective performances.
Investors viewed cryptocurrency as a dangerous habit and gold as a haven when markets erupted during significant events this year. With the S&P 500 (^GSPC) up almost 16% year to date and cryptocurrency off the risk-on train, it became even less appealing.
Bitcoin's tendency to collapse under duress has long been criticised. However, admitting that cryptocurrency is still in its infancy within the banking system is also a stale rebuttal at this point.
Naturally, there is a middle ground, and the mainstream financial sector is claiming it. Investing a little amount in cryptocurrency allows investors to minimize the downside while gaining some exposure to the upside.
Earlier this week, Bank of America said that it supports a 1%-4% allocation to digital assets for customers of its Merrill, Bank of America Private Bank, and Merrill Edge platforms.
The action comes after other major banks and asset managers, such as Vanguard, BlackRock (in a major reversal), and Morgan Stanley's global investment committee, warmed up to cryptocurrency.
The enormous profits that have generated cryptocurrency millionaires are limited by the industry's moderate push into the space. You don't have to watch "Ocean's Eleven" to understand that occasionally placing a large wager is necessary to win big.
However, caution might also prevail in a year when a speculative asset began the year higher than it is now. or, at the very least, assist you in losing slightly less.
