Researchers and financial analysts at the Wells Fargo Investment Institute’s Global Investment Strategy Team have declared in the bank’s special report for February 2022, that bitcoin (BTC) and other cryptocurrencies are viable investment vehicles that are still very much in the early stages of their evolution.
Cryptoassets Are Solid Investment InstrumentsIn a special report entitled Understanding Cryptocurrencies: Cryptocurrencies – too early or too late?, financial experts at the Well Fargo Investment Insitute’s Global Investment Strategy Team, tried to clear some of the confusion surrounding bitcoin and other cryptoassets as investment vehicles. In the report, the researchers pointed out that blockchain-based public cryptocurrencies are growing rapidly and they now appear to be near a “hyper-adoption” phase just like the internet, during the mid-to-late 1990s era. The researchers wrote:
“Over the past few months, we have written about cryptocurrencies and the unique technologies that underpin them. Today’s publication is not about the technology, but a common point of confusion regarding the future of cryptocurrencies as investments. That confusion is – some investors think that it is too early to invest, while others think that it may be too late. Our conviction is that cryptocurrencies are viable investments today but that it is still early in the cryptocurrency investment evolution.”
Not Too Late to Buy Bitcoin and AltcoinsDiving deeper into the matter, the Wells Fargo team explained that the exponential growth of bitcoin and other cryptocurrencies over the past decade in terms of price actions (versus traditional investment instruments) have succeeded in putting great FUD (fear uncertainty and doubt) in the minds of new investors. For context, the researchers pointed to the fact that the price of bitcoin ( ) has compounded at a 216 percent annual rate since its first transaction in 2010, while the Standard and Poors (S&P) 500 Index has only managed to compound annually at 16 percent in the past decade.
“Such cryptocurrency gains have led to increased media attention and enviable stories of newfound wealth. A select few individuals, holding since the earliest of days, even became billionaires. 12 out of the 2,755 individuals on the Forbes 2021 World’s Billionaires List emerged from the world of crypto. We understand the ‘too late to invest’ argument but do not subscribe to it ” the team added.The experts have made it clear that paying too much attention to the past performances of bitcoin and altcoins can be misleading to new investors, as these cryptoassets are an entirely different kind of investment and they are still relatively young compared to gold and other investment instruments. The team has also stated that cryptocurrencies are in the “early, but not too early” investment stage, as global crypto adoption has quickly accelerated in recent years, following the same adoption pattern with innovative technologies like the internet.
“While the technology behind cryptocurrencies is complex, and use cases can be hard to visualize for those new to the space, data shows that the world is beginning to embrace the technology – and quickly. According to Crypto.com, the number of global crypto users reached 221 million in June 2021 or just under three percent of the world’s population. Most impressively, it took only four months to double the global crypto population from 100 million to 200 million,” the researchers noted.In conclusion, Wells Fargo has advised investors to avoid rushing into crypto due to the fear of missing out, as most of the investment opportunities in the space still lie ahead. At press time, bitcoin (BTC) is trading around $43,533, with a market cap of $825 billion.