What does the future hold? WIll stocks continue to run higher as the thirst for equities grows by each passing day or will they be thwarted by cryptocurrencies some of them backed by securities and a more technocratic approach to markets?
According to an article published by CoinTelegraph entitled 'Investors Pull Billions from Stocks As New Bitcoin, Crypto Options Appear' there have been massive shifts in capital leaving stocks and entering the cryptocurrency markets.
The larger question at hand is....
Are cryptocurrencies and stocks at odds with each other or will we see the combination of both of them in the not too distant future?
Here are a few important details that may help us answer this question:
CNBC has reported that the stock market has seen the largest withdrawal rate since 2004, with more than $30 bln being taken out of the markets over the past 10 weeks. The major withdrawal also included a huge abandoning of precious metals.
Personally I understand the fleeting capital in stocks but I think treating precious metals in the same manner is a big mistake. Most people I know that invest in cryptocurrency also see the value in precious metals and they are keeping their holdings of both gold and silver.
Private client allocation to precious metals has seen a massive reduction, with portfolios holding 10 percent in 2013 being reduced to below two percent in recent weeks.
Keep in mind that paper IOU's dominate the precious metals commodity markets and so this may not be an accurate reflection of what is taking place with physical gold and silver markets.
Blockchain technology is producing new investment opportunities. Companies like LAToken and MyBit have developed methods for tokenizing investments, making it possible for large-scale investments to be purchased by smaller scale investors.
The decentralized platform of these companies makes it possible for investors to participate without the higher fees associated with traditional markets. LAToken has even produced a system where shares of Apple, Amazon and other blue chip stocks can be ‘tokenized’ and purchased in part by investors. CEO of LA Token Valentin Preobrazhenskiy says:
“We build a NASDAQ on Blockchain with a wider range of tradable assets, blurring the boundaries between crypto- and real economies, and offering our clients a dramatic reduction of listing costs, settlement time, and transaction costs.”
This last few paragraphs confirms what I believe will become a greater trend in cryptocurrencies and stocks. The line will be blurred even further and each day that passes we will see a more solidified consolidation of both investment vehicles... This may or may not be bad for large banks and stock brokers but they will still be able to play a roll in helping people choose the best cryptocurrency stocks to meet their goals and preferences.
Stock brokers will be replaced with cryptocurrency brokers as we enter a new technological age of blockchain investments.
It's clear that stock markets are being affected negatively as cryptocurrency and stocks are not complimentary at the moment but rather in direct competition for the same investment dollars. Companies have seen this trend are trying their best to bridge the gap between cryptocurrencies and stocks while being careful not to get into trouble with the SEC.
I'll leave my readers with this final question in hopes of sparking a discussion...
Do you think cryptocurrency will bring the downfall of stocks or will they both find a way to co-exist and both possibly transform into one in the same?
Please leave thoughts and comments below.
Thanks for reading!
Sources:
Investors Pull Billions from Stocks As New Bitcoin, Crypto Options Appear - CoinTelegraph
Cryptocurrency Trading Helps Make Traditional Wall Street Traders Millionaires - CoinTelegraph