Cryptocurrency: The New Alternative Investment?

Printed out graphs and calculator

‘Alternative investment’ refers to types of investment which have a value that’s not related to the performance of traditional assets such as stocks and shares.

Hedge funds and gold are two common type of alternative investment, popular because their performance wouldn’t necessarily be impacted by the stock market crashing. It’s important to diversify in this way when building an investment portfolio, as it means that you carry less risk.

As cryptocurrencies such as Bitcoin have grown in popularity over the past decade or so, they’ve become known as a new option for alternative investment. Historically, they have shown incredibly high rates of return, making them a savvy option for those who want to maximise their gains. The value of cryptocurrency is notoriously volatile, meaning that the value of any investment can go down as well as up. However, looking at past performance we can see that they tend to deliver excellent returns over time.

The performance of cryptocurrency has also been shown to be uncorrelated with the U.S. stock market. This is important for an alternative investment, as it means that your cryptocurrency prices may continue to rise even if your share prices fall.

An option for non-traditional investors?

When we talk about alternative investment, we’re simply referring to a type of diversification. However cryptocurrency goes further than this – it can also be seen as an interesting investment options for those who might have little to no interest in the stock market. Because currencies such as bitcoin are disrupting the financial market, those with an interest in new technologies, security and privacy may choose to invest not because they want to grow their wealth, but because they want to back an exciting new innovation that has the potential to reinvent our financial sector.

There is also a sizeable internet subculture that has sprung up around cryptocurrency, with popular figures like Elon Musk helping to introduce new audiences to the possibility of cryptocurrency investment. This means that more and more people are considering cryptocurrency as an option for their surplus income.

Investing in cryptocurrency for the first time

One of the things that makes crypto such a great first-time investment is the ease with which you can get started. Apps such as Bitcoin Profit allow users to sign up, deposit a relatively small initial stake of $250, and then start trading. More than this, they use an algorithm to identify potentially profitable trading opportunities, which you can automatically take advantage of.

There’s never any guarantee that you will make money, but with software available to help you understand the market, as well as a wealth of advice from seasoned investors in online forums, it’s easy for any investor to give it a go.

Remember to consider the range of different currencies available to you – aside from bitcoin there are now hundreds of other different cryptocurrencies on the market – and only invest with money that you can afford to lose. Essentially, the principles of investing with cryptocurrencies are the same as the principles of traditional investment. However the huge fluctuations in value means that there’s the potential for a lot more profit. 

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