Cryptocurrencies have evolved significantly since their inception in the noughties, both in terms of growth and how they are perceived by potential adopters and investors. However, the question that remains unanswered is whether cryptocurrency is a viable asset class? This article aims to provide insights into the current state of the crypto market and its potential as an investment option.
The Current Crypto Market at a Glance
Despite the historical data revealing exactly how far crypto has fallen since the halcyon days of November 2022, this year has actually started on a fresh and relatively positive note for tokens. At the very least, most tokens (including market leaders like Bitcoin and Ethereum) are on the arduous road to recovery, with the price of BTC alone up to £21,614.34 at the beginning of June. This trend is expected to continue through the remainder of the year, as BTC and ETH record incremental growth and lead the way for second and third-generation cryptos.
In terms of third-gen crypto assets, there are a handful of tokens that are expected to perform particularly well in the second half of 2023. These include Cardano, which continues in its quest to tackle the scalability issues associated with first and second generation tokens while enabling a vast and decentralized ecosystem, in which users can build a wealth of scalable applications and create further utility in the marketplace.
Is Cryptocurrency Still a Viable Asset Class?
While the medium and long-term future of cryptocurrency appears relatively rosy, this market is clearly not as attractive to investors as it once was. Trust in the crypto market has declined since the 2022 crash, while the potential upside for tokens and the chances of achieving short-term gains remain minimal. However, last year’s sustained market crash created opportunities for traders, especially those with a penchant for so-called “value investing”. This describes a methodology where you proactively select assets trading notably lower than their intrinsic or book value, and while it can be challenging to gauge accurately for crypto tokens, it’s undoubtedly worth considering.
The Last Word
Crypto clearly remains a theoretically viable option and one that has been relatively stable through 2023, while the low price of Bitcoin and similar tokens increases their respective value propositions in a recovering market. The global macroeconomic climate remains strained, with inflation still disproportionately high and interest rates rising. High rates of inflation continue to erode the purchasing power and underlying value of fiat currencies, while crypto tokens remain relatively immune to macroeconomic fluctuations.
Overall, the diversity of the contemporary crypto market and the fact that it has at least embarked on the road to recovery means that it remains a viable investment option at present, especially for those of you with a desire to achieve medium or long-term gains. However, those of you with a level of risk aversion or desire to achieve short-term gains may want to avoid crypto, at least for the foreseeable future. To learn more about which investment market or asset class is right for you, take this insightful trading quiz. This is ideal if you’re a novice trader, for whom assets such as cryptocurrency remain incredibly complex and intimidating.
