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The following was written by guest blogger Daniel Eyre of Blockchange.
Digital (crypto) assets offer investors a rare opportunity: the ability to invest in an entirely new
asset class that is still in its relative infancy. With interest at an all-time high, particularly as younger crypto-savvy investors come of age, financial advisors are facing significant pressure from their clients to provide exposure to this new asset class. Advisors who are able to offer clients this exposure are well-positioned to grow their client base and AUM as the asset class matures.
Exposure to digital assets through retirement accounts offers some interesting opportunities for investors to diversify their risk and maximize growth over the course of their investing lifetime. In this article we look into why investing in crypto makes sense generally, as well as some unique benefits when applied to retirement accounts.
Why Invest in Digital Assets?
As digital assets have seen more mainstream interest and support, their value has grown. Every
new merchant that accepts payment with cryptocurrency, every new exchange that supports
digital asset trading, and every new financial services firm that offers them improves the
long-term viability and popularity of this new asset class.
As digital assets experience mainstream adoption, demand increases. And because many
cryptocurrencies such as Bitcoin have a fixed supply, increased demand tends to increase their
value. Even today, digital assets are still in a relatively early phase of their lifecycle, so these
trends will benefit investors who opt in today.
The performance potential of digital assets is well illustrated by the standout performance of Bitcoin over the last five years (2016 through 2021) compared with conventional stocks as illustrated below. Bitcoin yielded the best returns when compared with comparables like AMD and Facebook, the S&P, and Gold, appreciating almost two orders of magnitude during the period.