Bitcoin and other cryptocurrencies are volatile and have been viewed as risky by skeptics within Wall Street ranks and veteran investors.
And yet, more are warming up to the notion of crypto as part of a diversified portfolio, given what’s being viewed as its technological staying power. Amy Arnott, a portfolio strategist for Morningstar, says cryptocurrencies can be a part of a diversified portfolio.
“Crypto is definitely becoming more established as a separate asset class and moving more into the investment mainstream,” she told Yahoo Finance’s All Markets Summit this week, as part of a crypto panel discussion. “It's definitely something that long-term investors should consider if they're more risk tolerant.”
However, Arnott recommended keeping crypto to a smaller allocation of an overall portfolio, noting that 1%-2% can go a long way. “I would definitely handle it with care, because the volatility has been so high. Even a very small percentage of cryptocurrency can really spike up your portfolio's risk profile,” Arnott added.
The global cryptocurrency market is now worth over $2.6 trillion and growing. Bitcoin is notoriously volatile, but in some instances has demonstrated a lower correlation with mainstream asset classes like stocks and bonds, and sold off less with other risk assets when markets drop.
… if you're looking to add crypto exposure to your portfolio, you're probably better off buying it directly through a crypto exchange or platform.Amy Arnott, a portfolio strategist for Morningstar
Isaiah Jackson, the best-selling author of “Bitcoin & Black America,” says bitcoin is a long-term asset and will remain that way.
“If you want to be a part of it, you have to think long-term,” he told Yahoo Finance this week.
“In any new market you will have volatility. You're not going to get rich just because you entered the market. You do have to have patience. But if you invest long-term the volatility does not matter,” he added.
Arnott said investing in crypto can be thought of as investing in the Internet in the late 1990s. “I think you have a lot of the same kind of growth trajectories,” she said.
“Consider it a growth asset and really a play on the long-term shift toward digital money and the ongoing revolution in the financial technology landscape,” Arnott explained. “You're not directly investing in the underlying technology, but you are getting indirect exposure to it.”
The strategist pointed to developments in payment processing, smart contracts, blockchain, NFTs (non-fungible tokens) and gift cards as examples. In the payments space, cryptocurrency exchange Bakkt () announced this week that it’s partnering with Mastercard () to , making it easier for consumers to pay using cryptocurrencies.
The companies will also offer the ability to earn rewards in cryptocurrency through their card spending.
“We want to be able to provide the ability to be able to use cryptocurrency in an everyday transaction,” Bakkt CEO Gavin Michael told Yahoo Finance.
“The Mastercard partnership includes the ability for us to be able to deliver crypto rewards, another way to gain an asset holding in this space in a fairly easy way.”
The ability to gain exposure to bitcoin has become easier after the Securities & Exchange Commission last week greenlighted the (ETF). But while that’s made it easier for investors to gain exposure, it may not necessarily be the best way to invest.
Arnott says the ETFs offer more transparency, and are easier to buy through an existing brokerage account — but they may not track the price of Bitcoin exactly, leading investors to miss out on the full gains of the underlying digital asset.
The ETFs are buying the front-month futures contract. As those contracts roll over, funds may have to purchase the futures at a higher price. Arnott estimates gains could be off 5% or 10% each year. That makes purchasing the actual cryptocurrencies through crypto exchanges the better bet.
“I think we will eventually see a crypto ETF that tracks the spot price,” says Arnott. “But at this point, if you're looking to add crypto exposure to your portfolio, you're probably better off buying it directly through a crypto exchange or platform.”
Bakkt has allowed trading in bitcoin futures before ETFs were available. Michael also believes ETFs will eventually be allowed to invest in the actual cryptocurrency, instead of just the futures contracts. He says he thinks the bitcoin futures ETFs will actually help smooth out volatility over time, since it will allow more investors to participate.
“We expect evolution in this space to move away from cash-settled prices through the futures contracts into physically delivered contracts, as has been the norm for other ETFs that have tracked based on a commodity,” he said.
Read the latest financial and business news from Yahoo Finance
Read the latest cryptocurrency and bitcoin news from Yahoo Finance
Follow Yahoo Finance on Twitter, Instagram, YouTube, Facebook, Flipboard, and LinkedIn
It’s been a mixed morning for Bitcoin and the broader market. A Bitcoin move back through to $68,000 levels would be needed to give the bulls another run at $70,000…
Luminar founder and CEO Austin Russell says the blistering start of trading for electric truck maker Rivian reveals something important.
The future of work will be hybrid, according to the founder and CEO of videoconferencing giant Zoom.
A work and travel "revolution" is upon us amid the pandemic that has fundamentally changed how people work and live, Airbnb co-founder and CEO Brian Chesky told Yahoo Finance Live.
Shares of the Canadian pot-giant Sundial Growers (NASDAQ: SNDL) jumped by as much as 35% in pre-market trading Friday morning. After the closing bell Thursday afternoon, Sundial released its 2021 third-quarter earnings report. While the company posted net earnings of $11.3 million in Canadian dollars for the three-month period, this positive financial development doesn't appear to be what's truly moving the stock this morning.
Share prices of AT&T (NYSE: T) hit a 52-week low of $24.54 on Nov. 4 after the company delayed the rollout of its C-band spectrum, a component of its new 5G network, pending an aviation safety review. CEO John Stankey, who took over the top spot last year, is returning AT&T to its telco roots after his predecessor ventured into a number of expensive, entertainment-related acquisitions. A key reason to consider AT&T stock is its wireless business, which has experienced strong growth.
Inflation is at a 31-year high. But these Mad Money megatrends could help you fight back.
In this article, we discuss the 11 best beaten down stocks to buy today. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Beaten Down Stocks To Buy Today. Growth stocks have taken a beating in the past few days after the United States Labor Department released […]
Shares of Roblox (NYSE: RBLX) are up 26.6% this week, according to data from S&P Global Market Intelligence. On Nov. 8, Roblox announced its earnings for Q3, which ended in September. Bookings (Roblox's sales equivalent) were up 28% year over year to $637.8 million.
The company crushed Wall Street's estimates on Monday, and many analysts praised the performance the next day.
Investors are constantly looking for stocks that will yield massive returns. That being said, finding these stocks can seem like an overwhelming task. Not to mention it can be expensive. Some of the most well-known names like Amazon and Alphabet can put you out thousands of dollars for just a single share. However, snapping up stocks with strong long-term growth prospects doesn’t have to cost you your entire savings. Using the TipRanks database, we were able to pinpoint two stocks with massive u
If you want to beat the S&P 500, a good place to start is with stocks that are proven winners. Here are two.
Nearly a week since it reported estimate-crushing earnings for the fiscal third quarter of 2021, shares of rare earth metals miner MP Materials (NYSE: MP) are marching higher on Thursday, rising 9.1 % through 3:10 p.m. EDT. You can thank Jefferies & Co. for that. MP Materials may not be the lowest-cost miner of rare earth metals, admitted Jefferies this morning in a note covered by StreetInsider.com.
Advanced Micro Devices (NASDAQ: AMD) has usually played second fiddle to Nvidia (NASDAQ: NVDA) in the market for discrete graphics cards, but it looks like it could gain an upper hand over its bigger rival in this lucrative space one day. Nvidia controlled 83% of the discrete graphics processing unit (GPU) market in the second quarter of 2021, increasing its dominance to the detriment of AMD, which held the rest of the market.
A bevy of Wall Street analysts followed up by lowering their price targets for the stock, adding to today's pain. For the third quarter, Bumble generated revenue of $200.5 million, up 24% year over year and actually ahead of management's previous guidance. According to The Fly, four analysts lowered their price targets for the stock as a result of third-quarter results.
The recent spin-off of its managed infrastructure business into a company called Kyndryl (NYSE: KD) removes a noncore business from its balance sheet. Also, management promised that the two companies would maintain the current combined dividend.
ContextLogic (NASDAQ: WISH), the parent company of the e-commerce company Wish, recently posted its third-quarter earnings report. It also announced that its founder and CEO Piotr Szulczewski would step down next February but remain on the company's board. When Wish went public last December, it served over 100 million monthly active users (MAUs) with its discount marketplace, which mainly enabled Chinese merchants to sell their products to overseas buyers.
It's only natural that many investors, especially those who are new to the game, prefer to buy shares in 'sexy' stocks…
In this article, we discuss the 11 best utility stocks to buy now. You can skip our detailed analysis of the utility stocks and go directly to read the 5 Best Utility Stocks To Buy Now. The utility sector includes the companies that provide basic services such as water, electricity, and natural gas. The industry […]
Pinterest (NYSE: PINS) was a market darling for much of the pandemic, but the image-based search engine has suddenly fallen out of fashion. The company faces significant headwinds from the economic reopening, which has pushed its audience away from some of its core use cases, including cooking, gardening, and home decor. This shift is one reason the company is struggling with user growth.
A modern tech company.
- Next Leading Technology Executive Max Schireson Joins Quantum Machines' Board of Directors – HPCwire
- Previous Mark Cuban says ethereum has the 'most upside' as a crypto investment – CNBC
No comments to show.