Investment thesis
Digital Assets offer new opportunities for growth and diversification of your assets
Why are digital assets interesting for investors? Why does this relatively new investment category deserve a place in every investment portfolio? We will explain that below. If you have any questions, we will be happy to tell you more during a personal maintenance.
Portfolio diversification
Harry Markowitz was the first scientist in 1952 to emphasize the importance of diversification within investment portfolios in his paper 'Portfolio Selection'. His portfolio theory, also known as 'modern portfolio Theory' (MPT), emphasizes the importance of diversification to reduce risk. Markowitz introduced the term 'Efficient Frontier', which reflects the most optimal composition of a spread investment portfolio, or the distribution that strives for the optimum ratio between risk and return. His theory encourages investors to find a balance between maximizing returns and minimizing risk. Through statistical concepts such as variance and covarie, this theory helps investors to optimize the portfolio and limit volatility.
Several scientific studies have shown that Bitcoin adds value to a diversified investment portfolio, because in the right proportion it ensures a better balance between risk and return. Adding Bitcoin to a portfolio with shares, real estate, bonds and other investment categories in recent years caused a higher risk -weighted return. A cause of this is that Bitcoin has a low correlation with other investment categories, which makes a positive contribution to the diversification of an investment portfolio. Diversification lowers the risk, without necessarily the expected return to negatively influence.
Global value storage and financial hedge
Bitcoin and alternative digital assets have been indispensable in our current society since its emergence in 2009. These alternative forms of money are scarce, not bound by boundaries, independent of governments and central banks and accessible to everyone, unique properties that become more important every day. This has made Digital Assets a particularly attractive investment. Not only because it is a hedge against the current macro financial system, but also because it has upward potential with a further adoption of digital assets. The current monetary policy has ensured historically high inflation and depreciation. Investors who see the long -term effects and consequences thereof understand the need to protect their ability to protect it, this is possible with Digital Assets.
As part of the transition to a digital economy, Digital Assets can also take on the challenge with gold as a worldwide value storage. Economic theory and monetary history prove that a asset gather as the demand for it increases compared to the supply. Although gold has been recognized as sustainable money and as a value storage for centuries, it has the disadvantage that it must be physically stored and moved. That makes gold less suitable as a form of money in the digital age. Bitcoin is often referred to as digital gold, because, like gold, uniform, divisible and verifiable, it can be traded digitally at the same time.
Pioneering and exponentially growing technology
Due to the discovery and invention of blockchain technology in 2008, it became possible to digitize money decentralized. This invention was revolutionary because this made it possible for the first time to send money digitally from person to person (peer-to-peer) to each other, without the intervention of a trusted intermediary, such as a bank, a government and/or another plant institution.
Digital assets all run on an underlying blockchain. Blockchain technology offers a wide range of opportunities for the future and is constantly developing. Some examples of this are Decentralized Finance (Defi), digital identity, smart contracts , improved supply chain management , safe health data storage, tokenization of assets, etc. These applications suggest that blockchain will not only influence the financial sector, but will also transform various other sectors . The final realization of these possibilities depends on technological developments, regulations and social acceptance.
As an example, we have shown the Bitcoin adoption curve below. The S-curve analysis explores the adoptive path of new technologies. This divides global adoption in stages of the growth cycle: innovators, early adopters, early majority, late majority and laggards. By providing insight into the adoption path with a new technology, it can be determined in which phase you are investing in a new technology. Most growth takes place during the early and late majority phases. Bitcoin has been in existence for 15 years, we believe that Bitcoin is now in the Early Majority phase, measured according to the number of global investors and the total amount that has been invested in digital asset so far.
Now use the unique possibilities that Digital Assets offer.
Contact us and we will be happy to tell you more about it.
