Why investors ‘absolutely’ need bitcoin in their portfolios
Bitcoin (BTC-USD) is recovering after experiencing recent losses following its climb to all-time highs. Maconomics CEO Ross Mac joins Yahoo Finance Live to discuss why he believes bitcoin is a necessary asset in investors’ portfolios despite its volatility.
Mac emphasizes that bitcoin should “absolutely” be part of an investor’s portfolio, describing it as “a more diversified approach” than traditional asset classes. He notes that with bitcoin gaining exposure to institutional investors it may become “a lot less volatile moving forward.” Mac calls Bitcoin one of the “greatest technological advancements” of our time, alongside artificial intelligence and the internet.
Mac acknowledges that since its inception, bitcoin has fallen 50% a total of eight times, yet each time has recovered and reached new highs. However, he stresses that “it’s a long-term hold,” and investors venturing into crypto should be comfortable with volatility, although he suggests that the new ETFs should create more stability.
For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.
Editor’s note: This article was written by Angel Smith
Video Transcript
[MUSIC PLAYING]
BRAD SMITH: So you want to talk about cryptocurrencies and specifically Bitcoin. Well, when the price falls, people will try to convince you it was never a real asset. When it jumps, the crypto bros get excited and tell you that it’s bigger than gold. A lot of the time, it’s all anyone can talk about. Bitcoin has rocketed higher this year, up over 60% in just a few short months. Now we’re back above that $70,000 threshold. So you may be feeling that FoMO if you don’t have any Bitcoin in your portfolio.
Here to tell you why it may not be too late to ride the Bitcoin train. We’ve got Maconomics founder and personal finance expert Ross Mac. Ross, should crypto be in the portfolio and why?
ROSS MAC: Brad, thanks so much for having me. And look, here’s the thing. The short answer is absolutely right. You’ve just really got to ask yourself, what is Bitcoin and why should it potentially be in your portfolio? And I think that it’s going to offer a more diversified approach to just the traditional asset classes, that being stocks, and bonds, and real estate, and as you mentioned gold.
Story continues
And I think when it’s all said and done, you just got to ask yourself, where is the smart money? And now with the emergence of institutional investors buying Bitcoin, it’s going to be way more– it’s going to be a lot less volatile moving forward. We’re talking about BlackRock, we’re talking about fidelity. And sometimes you got to ask yourself, this is the greatest technological advance in our lifetime. We’ve seen the internet in our lifetime, now we’re talking cryptocurrency and obviously artificial intelligence moving forward.
And when it comes to Bitcoin, I think Hindsight is always 2020. The average person is going to say, man, why didn’t I buy it 10 years ago? But the reality is moving forward, with the emergence of Bitcoin ETFs, with the fact that this is a finite amount, only 21 million Bitcoin will ever be mined. And the reality is, if every person in the world or every person in the US for that matter wanted to own Bitcoin, well, guess what? They can’t.
And so because of that– because of that demand and that limited supply, the price should only continue to rise higher.
BRAD SMITH: Well, so there’s the volatility aspect of this too. And I mean, it’s HODL, hold on for dear life for a reason, because of that volatility at times. So what tips can you give someone who may be nervous because of that volatility going in on crypto?
ROSS MAC: I love that question. If you look over the past 10 years, when it comes to volatility, the price of Bitcoin has declined over 50% of the time eight times. And guess what? We’re in that eighth cycle, meaning that in all of those times, the price of Bitcoin has decreased over 50% of the time. And guess what? It has gone on to recover and also make new highs. And because of that, you got to ask yourself, OK, if I’m buying this, what is my investment horizon as well as what is my risk tolerance?
But understand this, Bitcoin is a long-term hold, it is a great asset to hold for the long term. Therefore, getting into it, you have to be able to stomach some losses. I wouldn’t recommend buying crypto if you are afraid of having any drawdowns. But I truly feel as though moving forward, with the emergence of actual new institutional investors buying it, I think that we will see a lot less volatility moving forward. It should be a lot more stable.
But to the average investor, the way I would approach it is don’t actually look and try to time it right, I want you to approach it the same way, I would tell any person when it comes to investing in traditional stocks. You want to dollar cost average. One month from now it might be higher, one month from now it might be lower. But the reality is you’re looking 5, 10 years down the line. And 10 years down the line, we’re talking 2034, we’re 99% of all the Bitcoin would have been mined.
Well, guess what? We’re talking once again, the supply is limited and the demand is only going to continue to increase. And I think that if you approach a dollar cost averaging meaning, you’re buying the same amount every month or every week or every quarter. But irrespective of if the price is higher or lower, it will take all of the guessing work out, and you will find yourself a lot happier in the years to come.
BRAD SMITH: All right. Ross Mac with the case for crypto and Bitcoin. Ross thanks so much for taking the time today.
ROSS MAC: Thanks for having me.
