CoinTrust

CoinShares Report Compares Bitcoin to a High Risk Tech Stock

According to a research report published by digital asset management firm CoinShares, Bitcoin behaves similar to a tech startup stock rather than digital gold, with investors realizing huge rewards in case everything goes right but loses almost everything in case the cryptocurrency fails.

The report titled “A Little Bitcoin Goes a Long Way” argues that Bitcoin (BTC) commands huge reputation as it began trading at near zero levels. The report was authored by James Butterfill and Christopher Bendiksen.

The report stated “If it reaches its potential, the value could be immense. At the same time, there is a non-zero chance that it fails entirely, leaving the value of Bitcoin close to zero.”

Contrary to many professionals who have called for spending 1% of total investment on cryptos, CoinShares recommends investing up to 4% in Bitcoin (BTC) alone.

The firm came to the conclusion that Bitcoin is a dependable store of value by studying how the crypto performed as portion of a balanced portfolio in the ratio of 60:40.

The study showed that the token improved annual yield by 9.7% beginning 2015, nearly twice that of similar assets.

There is nothing wrong or absurd in behaving like a tech stock. Since the crypto flash crash in March, tech stocks have rallied continuously, barring minor corrections.

For example, the stock of Amazon increased 70.7% to $3,170, while the stock of Apple rose by 63.3% to $450. Similarly, Facebook and Google increased 54.5% and 23.6% to $263 and $1,496.

The report has been published after Bitcoin turned bullish to reach $12,000 level for the first time in a year.

Coinshare report argues that “Bitcoin is an asset in its infancy.” The document explains how it will gain reputation as an asset of value in the future.

“As Bitcoin matures, its robustness is further proven, and its risk of failure moves further and further away from zero, we believe investors will start treating it differently, leading its macroeconomic behavior to follow suit.”

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