Discerning Investors Should Consider lnvesting in Digital Assets
Author: Hillroute
Date:23 August, 2023
Urge discerning investors to consider investing in digital assets due to its potential for wealth creation, the resilience of the market despite regulatory challenges, and the transformative power of the web3 ecosystem.
With limited supply and growing demand, cryptocurrencies offer the potential for appreciation and act as a hedge against fiat erosion. The early stages of crypto adoption provide an opportunity for significant returns, and the revenue generation of L1 and L2 blockchain networks showcases their intrinsic value.
On-chain stablecoins are surpassing traditional players, and the web3 ecosystem promises a decentralized and inclusive future. Embracing crypto now allows HNIs to position themselves for long-term growth and participate in reshaping finance and technology.
Introduction:
As the CIO of Hillroute, I would like to present a compelling case for why discerning investors should seriously consider diversifying their asset pool by investing in the crypto market. While crypto is still in its early days, the potential for wealth creation, the resilience of the market, and the transformative power of the web3 ecosystem make it an attractive investment opportunity.
- Fiat Erosion and Crypto’s Appreciation Potential: Ability of central banks to raise debt means that fiat will always be an instrument of capital erosion and not appreciation. Unlike traditional fiat currencies, which can be devalued by central banks, cryptocurrencies like Bitcoin and Ethereum have limited supply and are designed to be deflationary. This scarcity, coupled with growing demand, has the potential to drive significant appreciation in crypto assets over the long term.
- Early Days and Wealth Creation: Crypto currently has a market cap of $1 trillion with only 4% mass adoption, indicating that we are still in the early stages of its growth. This presents a unique opportunity for wealth creation as the market expands and more individuals and institutions recognize the value and potential of cryptocurrencies.
- Crypto Adoption and the Internet Comparison: Crypto adoption is mirroring the growth of the internet. If the trend continues, the total number of crypto users is projected to reach 1 billion by 2026/27. This level of adoption signifies a massive shift in how people transact, store value, and participate in the global economy. Investing in crypto now allows HNIs to position themselves at the forefront of this transformative wave.
- Resilience and Market Growth: Despite regulatory challenges and policy agendas, the crypto market has remained resilient and continues to grow. Hostile regulatory activity from institutions like the SEC in the US and policy setting from countries like India in G20 have not halted the progress of the crypto industry. This resilience speaks to the robustness and potential longevity of the market.
- Long-Term Returns and Outperforming Traditional Asset Classes: Bitcoin’s volatility has often overshadowed its long-term returns. However, when viewed as a marker for digital assets, Bitcoin has consistently outperformed traditional asset classes. Its ability to act as a store of value and hedge against inflation has attracted the attention of institutional investors, further driving its long-term potential.
- L1 and L2 Revenue Generation: The revenue generation of Layer 1 (L1) and Layer 2 (L2) blockchain networks has firmly established their intrinsic value. In 2022 alone, L1/L2 protocols earned $4 billion+ in fees, demonstrating their ability to facilitate transactions and provide valuable services to users. This revenue generation solidifies the foundation of the crypto ecosystem.
- On-Chain Stablecoins and Settlements: On-chain stablecoins have emerged as a powerful force within the crypto market. In 2022, settlements conducted using on-chain stablecoins crossed $7 trillion, surpassing legacy players such as Mastercard and AmEx. These stablecoins are now poised to rival traditional financial networks like VISA, which currently sits at $12 trillion. The growth of on-chain stablecoins highlights the disruptive potential of crypto in the global financial landscape.
- Web3 Ecosystem and a Better Future: The web3 ecosystem promises a decentralized, inclusive, and transparent future for the internet. It envisions a digital landscape where users have control over their data, privacy is protected, and value is distributed more equitably. Investing in crypto allows HNIs to support and participate in this transformative movement, which has the potential to reshape industries and empower individuals worldwide.
Conclusion
As an experienced participant in capital markets and emerging asset classes industry, I would urge to consider investing a portion of your capital in the crypto market. The potential for wealth creation, the resilience of the market, and the transformative power of the web3 ecosystem present a compelling case for including crypto assets in a diversified investment portfolio. By embracing crypto now, discerning HNI investors can position themselves for long-term growth and play an active role in shaping the future of finance and technology.