Forget Bitcoin! This market crash could be an opportunity to make a million
The Motley Fool
Published Dec 30, 2018 14:18
Updated Dec 30, 2018 14:45
With the Bitcoin price having fallen by over 80% in the last year, many investors seem to be wondering if now is the right time to buy the virtual currency. While this is a noble aim in terms of trying to buy an asset after it has declined since it could offer a more favourable price, the reality is that the stock market may offer a stronger long-term investment opportunity.
This is due to the inherent challenges associated with investing in Bitcoin, in terms of its lack of fundamentals and real-world application, as well as the long-term growth potential which a range of stocks currently offer. Therefore, investors may be better off forgetting Bitcoin and buying stocks right now.
Disappointing prospects Perhaps the most challenging aspect of investing in Bitcoin is its lack of fundamentals. Even after it has declined by 80% in a 12-month time period, investors have no way of knowing if it offers good value for money. The cryptocurrency is dependent upon supply and demand, which its track record of performance shows can change rapidly. And even though it may appear cheap compared to where it was trading a year ago, it is still more than three times more expensive than it was at the start of 2017.
In the long run, virtual currencies could become increasingly prevalent. The world is becoming increasingly digitalised, and a virtual currency seems like a logical next step. However, Bitcoin’s limited size could limit its real-world application and restrict its longevity. For investors thinking years ahead, it may prove to be a significant disappointment .
Growth opportunity In contrast, the stock market could offer an improving long-term investment opportunity. Indices such as the S&P 500 and FTSE 100 have experienced falls in recent months which could mean that a number of their incumbents now offer wide margins of safety. History shows that stock market falls are always followed by rises, and this could provide a recovery opportunity over an extended time period.
Of course, the world economy faces an uncertain future. Investors may be concerned about challenges such as a rising US interest rate, which could choke-off the strong performance recorded in recent quarters by the US economy. Or, the impact of tariffs could be worse than expected, and there may even be the potential for further protectionist policies to come into force over the coming months.
Get The App
However, the stock market faces continual risks. At any given time there are a number of factors which could hurt world GDP growth and global stock market valuations. Even if there appears to be a lack of known risks, there are always threats which are ‘unknown’ and that could equally lead to a decline in stock prices. As a result, there is never a perfect time to invest. But with valuations now appearing to be attractive, buying stocks for the long term could be a sound move.
Written By: The Motley Fool
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.