In today’s issue, Christopher Jensen by Franklin Templeton crosses some of the noise and false ideas on the investment of cryptography in the article in today’s myth.
Then, Pablo Larguia de Senseinode answers questions about the rewards of clearing in Ask A Expert.
–Sarah Morton
You read Crypto for advisers, the weekly Coindesk newsletter which unpacking digital assets for financial advisers. Subscribe here to get it every Thursday.
Myth Busting: 3 things that investors are still mistaken about the crypto
Cryptocurrencies have existed for more than a decade but are largely misunderstood by the investment community. In this article, we have some of the greatest myths concerning crypto to help you assess opportunities and risks.
Myth n ° 1: “Investing in the crypto is complicated and confusing.”
The prospect of dealing with digital portfolios, private keys and unregulated crypto exchanges has led many traditional investors to believe that investment in the crypto is beyond them. However, the advent of products negotiated in exchange for crypto (FTE) in 2024 presents investors a new avenue to access digital assets in a familiar investment vehicle.
With Crypto ETPS, investing in digital assets such as Bitcoin has become as simple as the purchase of shares actions. Investors can buy Bitcoin and Ether ETPS via their regular brokerage accounts, like any other title. This eliminates the need to configure and manage cryptocurrency portfolios on an exchange, which makes cryptography accessible to a wider audience. In addition, these ETPs are regulated financial products, offering an additional safety layer to investors. Although there are certainly a lot of truth behind the old cryptographic adage, “not your keys, not your crypto”, the popularity of the Crypto proves that auto-custody should not be the only way to win an exhibition to cryptography.
Myth n ° 2: “It is too late to invest in Bitcoin – I missed the race.”
While Bitcoin has experienced a substantial price assessment, the idea that it is “too late” to invest is wrong. In reality, Bitcoin remains in the early stages of institutional and dominant adoption, with significant potential for future growth.
About 1.7 billion of dollars, the Bitcoin market capitalization is less than 9% of gold (~ 19.4 dollars) and an even smaller fraction of the action, bond and real estate markets. If Bitcoin continues to gain ground as a reserve of value, means of exchange or reserve assets, its market capitalization could develop considerably.
Bitcoin’s hard offer of 21 million makes it intrinsically rare – 94% of all BTCs have already been extracted, and up to 20% can be permanently lost. Meanwhile, the Bitcoin emission rate, otherwise known as “block rewards”, decreases in half every four years, which means that the new offer is continuously shrinking while demand increases, in particular with institutional investors.
The launch of the BTC stock market negotiated products a little over a year ago has broken records, with cumulative entries exceeding $ 35 billion – the fastest growth and the fastest growth in history. These products offer retail institutions and investors with regulated and transparent access to Bitcoin, accelerating consumer adoption.
The recent presidential change in the United States inaugurated a much more favorable position on digital assets. Politicians that have hindered adoption are under revaluation, opening the door to a broader institutional participation. On March 2, the administration announced that it was going forward on the creation of a cryptographic strategic reserve which would include five major pieces – Bitcoin (BTC), Ether (ETH), Ripple (XRP), Solana (Sol) and Cardano (ADA). In addition, 18 American states actively examine the adoption of the Bitcoin reserve, while a total of 33 states envisage legislation to establish their own bitcoin reserves. This underlines the growing recognition of Bitcoin as a legitimate financial actor.
Another major change is the recent repeal of SAB 121, which removes a key regulatory obstacle to the adoption of cryptography by opening the way to banks to more easily have bitcoin and digital assets. This could unlock a significant institutional demand and further integrate bitcoin into the financial system.
Bitcoin is still in the first adoption sleeves. Its small market size compared to traditional assets, supply constraints, institutional momentum and the evolution of the regulatory landscape suggest that the possibility of investing is far from over. Although the appreciation of past prices does not guarantee future yields, the story that the best days of Bitcoin are behind it ignores the wider macroeconomic and institutional trends.
To read the full article on the Franklin Templeton website, click here.
All investments include risks, including possible loss of capital.
Blockchain and cryptocurrency investments Are subject to various risks, in particular the inability to develop digital asset applications or to capitalize on these applications, theft, loss or destruction of cryptographic keys, the possibility that digital asset technologies are never fully implemented, the risk of cybersecurity, conflictual intellectual property claims and incompatible and changing regulations. Speculative trade in bitcoins and other forms of cryptocurrencies, many of which have shown extreme price volatility, has a significant risk; An investor can lose the total amount of his investment. Blockchain technology is a new and relatively not tested technology and can never be implemented on a scale that offers identifiable advantages. If a cryptocurrency is considered to be security, it can be considered violent the federal laws on securities. There may be a limited secondary market or without cryptocurrency.
–Christopher Jensen, research manager, Franklin Templeton Digital Assets
Ask an expert
Q. Why are the awards of jealking often considered as a type of investment?
A: Many perceive jalitude as a passive income because yields are often expressed using the percentage of annual yield (APY). However, its source of income does not come from interest; Instead, it is generated by the income earned to perform critical network security tasks.
Q: Why mark a security function, not an investment?
A: The British Treasury recently clarified that the development is not an investment program, but rather an essential security service and cryptographic service to validate transactions on a blockchain of evidence (POS). Employed is a security function in that participants secure decentralized networks and are rewarded to do it effectively. Protocols such as Ethereum define validator rewards through mechanisms accessible to the public, such as EIP-2917.
Although the ignition rewards can be predictable, they fluctuate according to the performance of the validator and network conditions. Recognizing the markup as the backbone of blockchain’s security ensures a political framework that aligns with its true role.
-Pablo Larguia, founder and CEO, Senseinode
