It is usually indicated that Bitcoin and cryptocurrencies in general constitute a high risk investment. And that appreciation is based on the high volatility that shows its price. But is it correct to evaluate the risk of an eventual investment in this market exclusively according to its volatility?
The blockchain technology
The cryptocurrencies are the assets of a technology in development in which more and more institutions and individuals are interested. There are few companies and people who are investigating their possible applications and more are adding up.
Bitcoin trajectory
Bitcoin was born in 2009 and if you look at the trajectory of its price since then, you can see a clear upward trend in the long term. The falls he has suffered have always ended in a renewed impulse.
Nobody can know for sure what the future will bring, let alone in a phenomenon as novel as that of cryptocurrencies. There are reasons to believe that they will prevail in the daily life of people and reasons to believe that they will not reach a good port (See: About blockchain technology).
This uncertainty is the best scenario for the proliferation of gurus who claim to know exactly what will happen. The most advisable thing for a moderate investor is not to trust any of them, neither those who ensure success nor those who claim failure, since their positions tend to defend themselves with a certain dose of fundamentalism.
Risk and diversified investment
One of the basic premises for any conservative investor, that is, with risk aversion, is that he diversifies his portfolio, not placing all the eggs in the same basket. And that diversification of the conservative investor must arise from the consideration of possible scenarios that may exist in the future.
If we consider the possibility that cryptocurrencies impose in the future and constitute a certain threat to the FIAT currencies, then it is questionable if a conservative investor should not think about taking out even a minimum portion of the financial investments that he has in currency FIAT to use it for the cryptocurrency market.