Just a few years ago, cryptos weren’t really considered an asset class.
Since then, their popularity has exploded.
Cryptos are now a $1.8 trillion market.
And I believe they’ll outperform every other asset class over the next decade.
In today’s video, I explain why institutional and retail investors alike are moving into crypto.
(If you’d prefer to read a transcript, click here.)
Hey everyone. Steve Fernandez here with Market Insights for this week.
Today, I’m going to go on record and tell you why I think crypto will be the best-performing asset class over the next decade.
And it’s kind of funny because just a few years ago, crypto wasn’t even considered an asset class.
Before we get into that, if you like what we have to say or want to know more about tech and the crypto market, subscribe to our channel.
We upload videos every week where we walk you through our insights on these aspects of investing.
Will Crypto Be The Best Performing Class?
Now, there are a couple of reasons why I think crypto will be the best-performing asset class. And they share one similarity: investment time horizon and investment attitude.
Institutional and retail investors alike are moving into crypto. Venture capital firms on the institutional side, and the younger generations of investors on the retail side.
I did a video a couple of weeks ago about institutional investing in crypto and the surge in funding for private blockchain and crypto companies.
It was $25 billion in investment for private blockchain companies in 2021. That was up 700% from 2020. So a huge jump.
(Source: CB Insights.)
Venture capital firms accounted for the majority of this funding. And they have roughly 10-year time horizons, typically, with their investments.
So the fact that they’re ramping up their investments now goes to show that they see crypto as the place to be over the next decade or so.
And these investments won’t manifest for quite some time. So they’re banking on crypto being a lot stronger than it is today, you know, 10 years from now.
The goal of venture capital is to generate outsized returns on specific investments. And over time, they’ve done that.
So I think that their attitude toward crypto speaks volumes about where it’s going. And they’re going to know more about the up-and-coming trends than anybody else.
Crypto Is Funding Retirement Accounts!
On the retail side, I mentioned a lot of support for crypto as well. That’s going to come primarily from the younger generations.
I saw a survey that found that 56% of Gen Z and millennials expect crypto to fund at least a portion of their retirement account.
Again, these younger investors have a long time horizon. They have several decades, most of them at least, anyway, until they retire.
Now, I’m a millennial. I’m at the very lower end of the millennial age group. But the oldest millennial is about 41 at this moment in time.
I believe the average retirement age is about mid-50s, roughly, give or take a few years. But that just goes to show you that even the oldest millennial has over a decade until they retire.
And that doesn’t even scratch the surface on their peak earnings years.
The average peak earnings year for men is 55, and 44 for women. So as these investors who are obviously bullish on crypto grow their incomes more, and more options become available for retirement accounts, I expect that a lot more money will funnel into crypto within that demographic.
We’re already seeing that now.
Just this week we saw that Fidelity is launching bitcoin investing within its 401(k)s for its clients.
In the past, clients that wanted to get exposure would have to invest in closed-end funds, or even ETFs that indirectly track crypto assets.
But now they can invest specifically in the crypto themselves. And it started with bitcoin, but I expect that to branch off into other cryptos as well as it gains popularity.
Invest and Hold On For Dear Life!
I mentioned that as millennials mature financially, more money should go into crypto. And like I said, they have a longer-term time horizon.
And the funny thing is, they have this investment mindset where they’re going to hold through the volatility.
They’re going to hold through any negative news. If there’s poor media sentiment, they’re going to hold.
And literally there’s a meme going around where it’s HODL — hold on for dear life.
Now, you may not know what that means. But I can tell you that it really just means people are willing to hold on through the thick and thin of the crypto market.
I expect that people will continue holding their crypto. And why wouldn’t they?
Younger generations still have decades of earning potential ahead of them. They don’t need to tap into their investments right now.
And, you know, there’s that community aspect of it where everyone says, “Let’s hold.” And I expect that will continue over time.
What’s ironic to me is that crypto is outperforming a lot of tech stocks right now in the last couple of years.
If you look at this chart, you can see that the Bloomberg Galaxy Crypto Index is completely crushing the IMI Innovation Index.
Now, granted, the IMI Innovation Index did well in the months leading up to this chart.
But this just goes to show that, you know, even in a time of distress for stocks, bonds and a lot of markets, crypto has vastly outperformed.
And like I said, it’s ironic because investors in these conditions are going toward stocks that generate cash flow or pay out dividends.
It’s really, you know, a migration into value, into cyclical stocks. And the high-growth names that don’t really generate income and don’t pay dividends have gotten crushed.
Yet crypto is still doing pretty well.
Now, there’s the ability to generate some sort of yield on a lot of cryptos through staking and yield farming.
I’m not going to go into that. My colleague Ian King, who also produces videos on this channel, can give you some more insight on that.
But really, this chart alone should be enough to show you that through these peaks and valleys, crypto is outperforming. And you have to have some exposure to crypto.
I’m not one of those people that thinks bitcoin is going to replace the U.S. dollar or anything like that. But I’m a firm believer that you should have some sort of investment in crypto because, really, you don’t need much.
It really just takes a small investment in a lot of these cryptos to make potentially life-changing money.
Ian, as I mentioned, is heavily into crypto. He even recommended a crypto that generated a return of over 18,000% in just a year. And that was LUNA.
His Next Wave Crypto Fortunes subscribers don’t hold that one anymore. But he has a few more on his radar.
He’s an expert there. I’ll let you look at his recent presentation, if you want, about some cryptos that are on his radar. And you don’t want to miss that.
Like I said, yeah, you don’t want to miss out on crypto when it’s growing so quickly and the younger generations and the early-stage investors are starting to move money even moreso into that space.
So that’s going to do it for the video today. Again, subscribe to our channel. If you like the video, click the like button. We’ll talk to you next week.
Research Analyst, Strategic Fortunes
From open till noon Eastern time.
GTY Technology Holdings Inc. (Nasdaq: GTYH) develops software technologies for the procurement and vendor or supplier sourcing industry. The stock jumped 115% this morning on the news that it is being acquired by private equity firm GI Partners.
Vaxxinity Inc. (Nasdaq: VAXX) develops therapeutic candidates in the fields of neurology and coronaviruses. The stock climbed 75% on the news of company insiders, including the CEO and the executive chairman, purchasing additional shares of the stock.
Zymeworks Inc. (NYSE: ZYME) discovers, develops and commercializes biotherapeutics for the treatment of cancer. The stock is up 33% after the company received a buyout offer from a division of the private equity group All Blue Capital.
Finch Therapeutics Group Inc. (Nasdaq: FNCH) develops a novel class of orally administered microbiome therapeutics. It is up 32% after the FDA removed a clinical hold on the investigational new drug application for CP101, a drug for preventing recurrent C. difficile infections.
Clearwater Paper Corp. (NYSE: CLW) manufactures and supplies paper and paper products such as tissues. The stock is up 22% after the company managed to beat first-quarter earnings estimates thanks to raising prices to combat inflation.
Bioceres Crop Solutions Corp. (Nasdaq: BIOX) provides crop productivity technologies designed to transition agriculture toward carbon neutrality. It rose 18% after China approved imports of the company’s drought-resistant soybean crop strain.
Pinduoduo Inc. (Nasdaq: PDD) operates an e-commerce platform in China. It is one of the Chinese stocks up 17% today on signals that the Chinese government may end its regulatory crackdown on tech companies in an effort to help the economy.
Bilibili Inc. (Nasdaq: BILI) provides online entertainment services and mobile games aimed at the younger generations in China. This is another Chinese tech stock that is up 14% on the news that Chinese regulators will suspend their crackdown on tech companies.
NCR Corp. (NYSE: NCR) manufactures self-service kiosks, point-of-sale terminals, ATMs, cheque processing systems and barcode scanners. It is up 12% on the news that it has attracted buyout interest from at least six potential bidders including Apollo Global Management.
Mohawk Industries Inc. (NYSE: MHK) designs and manufactures flooring products for remodeling and new constructions of residential and commercial spaces. The stock is up 11% after the company delivered great first-quarter results thanks to strong demand for home renovations and higher prices.