Financial Planners Advocate Bitcoin Investment as Alt Season Begins!

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Crypto currency investment has been a topic that has been gaining traction and intrigue beyond the past decade. With many early investors of Bitcoin now retired on millions due to the amassed wealth from early adoption.

Many financial advisors were treading carefully due to its inherent volatility over the past However, recent developments in the crypto market including Bitcoin's resurgence and the growing interest in altcoins have led some financial planners to recommend crypto investments as a means of diversifying portfolios.

In fact, more and more financial advisors are recommending people invest in crypto currency than ever before, but cautiously.

Bitcoin Rebounds

The world's largest crypto currency, Bitcoin. Has made a remarkable recovery surging to USD34,600 at time of writing after enduring a challenging 2022 period. This resurgence has sparked renewed interest from financial planners many of whom are suggesting that clients consider investing in Bitcoin to capture the growth of the token as it has already increased 100% in value since this time last year!

Bitcoin's recent price increase has coincided with stock market fluctuations and rising bond yields. With the Federal Reserve maintaining high interest rates and geopolitical tensions threatening financial stability. Some advisors believe that including Bitcoin in an investment portfolio can be a prudent move for diversification.

The ongoing Ukraine and Russian war and now the possibility of another war breaking out in the middle east will continue to put financial pressure on markets and most likely will lead to more interest rate rises as governments move to find funds to support humanitarian and military support in both wars.

The outlook for a decrease in interest rates that were supposed to occur in 2024 is now looking like it will be pushed back to 2025 as the world reels from the growing war problems plaguing our current time. So investors are keen to find alternative investment opportunities to safeguard their wealth.

Financial Advisors Advice

Vaughn Kellerman an associate wealth advisor at HCM Wealth Advisors recommends allocating between 1% to 3% or for those who can afford the risk even up to 5% of investment funds to Bitcoin. Also depending on an investor's risk tolerance and portfolio size. He emphasizes Bitcoin's "first mover advantage" as a safer bet compared to newer more volatile coins.

Furthermore, Bitcoin is gaining attention as a potential inflation hedge due to its fixed supply and decentralised nature and with a strong community backing including the launch of a possible Bitcoin ETF in days. It is gaining traction as a possible safe investment opportunity.

This is despite aggressive rate hikes by the Federal Reserve and average consumer prices continuing to rise. This has contributed to Bitcoin's allure as an alternative investment outside the mainstream banking system and promoting Decentralised Finance (De-Fi) as the future of money and investments.

The launch of an exchange traded fund (ETF) tracking Bitcoin could make it easier for everyday investors to add crypto currencies to their portfolios. Recent developments such as BlackRock's application for a Bitcoin ETF and the court's decision to convert a Bitcoin trust into an ETF, have boosted Bitcoin's price.

Daniel Yerger the president at MY Wealth Planners questions whether Bitcoin truly provides diversification since it often correlates with the movements of the broader stock market. He states that to serve as a diversification tool, its price should move in the opposite direction of traditional assets.

Altcoin Season is here!

With the Fear and Greed Index Turning Green it is safe to say that we are entering Altcoin season with data published on coinmarketcap showcasing strong growth in Altcoins.

The increased buy pressure on Bitcoin is sending the overall market up which now has a total marketcap of USD1.28 Trillion and growing. De-Fi on Ethereum chain continues to have growth in Total Value Locked which is showing a return of markets.

The question remains if we will see the return of market prices that we saw in 2021, anything is for certain but if COVID caused a market rise than two wars might have a similar impact especially if interest rates continue to rise and Bitcoin gets it's first real test in the midst of a financial crisis.

image sources provided supplemented by Canva Pro subscription. This is not financial advice and readers are advised to undertake their own research or seek professional financial services