Today, more people are investing in cryptocurrencies. With the rise in the value of Bitcoin attracted many investors to the field of digital currencies. Now some professional stock investors who are investing in stocks for a long time are thinking whether or not to add cryptocurrencies to their portfolio. On the other hand, new investors and those who have just started their investing journey are confused about which is better stock or cryptocurrencies.
Well, before going straight to the point let us analyze them from different aspects. Because it depends on a lot of factors such as risk tolerance, infrastructure, history of both the investment options, etc.
Comparison in Terms of Risk
No doubt, every investment option has some risk that varies from one asset to another. To compare both stocks and cryptocurrencies in terms of risk, it is very clear that cryptocurrencies are riskier than stocks.
Because there are certain data for stocks that you may use to predict where the price will go. But there is nothing certain about cryptocurrencies. This is where cryptocurrencies lack in providing the predictability. Stocks can be predicted, but there is no guarantee but still, there are some possibilities that you may take into considerations as a way of analyzing the risk factor.
Whereas, cryptocurrencies are unpredictable as it works on the basis of supply and demand. Again, there are no regulations and cryptocurrencies are new investment options. Moreover, there are more chances of money laundering, fraudulent activities associated with cryptocurrencies as people do not have much knowledge about this market.
However, it totally depends on your risk tolerance if you want to take high risk then you can. Because many investors from Bitcoin Era, a platform for investing in cryptos have made significant profits by investing in bitcoin and its other alternatives. Now let us look at the history of both investment options.
Comparison in Terms of Infrastructure and History
Well, you can’t predict the future of any investment option by looking at the past. Anyway, you can get a perspective on how the investment opportunities have performed in the past so as to make a decision.
Cryptocurrencies have come into existence ten years back, whereas stocks are from more than hundreds of years. So the stock market is reliable because it is supported by investors for a very long time. It has an established infrastructure so more reliable. So the stock market is more reliable than cryptocurrencies in terms of historical background, now let us compare in terms of return.
Comparison in terms of Reward
Now there are many crypto-traders who will argue that you will get more return in cryptocurrencies as compared to stocks. Yes, it is true to a great extent, because cryptocurrencies like bitcoin have brought up a revolution in the history of investment. The return has really magnificent, but only a few cryptocurrencies have the potential.
Investing in any cryptocurrencies can’t give you such returns. The main reason for the return is the bitcoin revolution which really performed well in 2017. After which people are more attracted to exploring such cryptocurrencies which can provide that much return. On the other hand, if you do not want to take much risk and gain decent profits but for the long term then go for the stock market unless there is stability in the crypto market.
If you overall compare the assets, your main investment should be focused on stocks. Because there is an established structure, regulation, predictability, and less risk related to scam and fraudsters. So cryptocurrencies shouldn’t be your main asset in your investment portfolio.
If you want to diversify your investment option then you can add cryptocurrencies to your investment portfolio. But make sure to check your risk tolerance and how much risk you can take on cryptocurrencies. Remember, when you consider cryptocurrencies, think like you are going to lose all the investment in cryptos because that is highly unpredictable and volatile especially bitcoin.
Now you have come to know that cryptocurrencies are more volatile than stocks. The return is high in cryptocurrencies but there is also great risk in them. Finally, there are so many uncertainties related to cryptocurrencies in terms of infrastructure, price movement, and regulations, so I recommend you limit your investment in cryptocurrencies.