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How to Talk to Investors about Bitcoin
Do you want to convince clients to invest in Bitcoin? Here's how you can talk to investors about investing in Bitcoin.
Any financial advisor that wants to convince clients to invest in Bitcoin must sound professional and experienced when discussing cryptocurrency investments with your customers. Bitcoin is the most prominent digital asset that uses cryptography to ensure safety. Other assets in this class include Litecoin, Ripple, and Ethereum. Unlike conventional currencies, Bitcoin doesn't have a bank or central authority regulating it. It also doesn't have the backing of any government.
This virtual currency can trace its origin to 2008 when Satoshi Nakamoto published a Bitcoin white paper explaining its code and technology. Most importantly, this paper explained how people could mine Bitcoin digitally to enhance its supply.
People use computer algorithms to mine Bitcoin by solving several calculations to earn new tokens as a reward. The computations are time-consuming, involving verifying Bitcoin transactions. The world can only have 21 million Bitcoin, and miners keep the supply growing. Today, people can buy Bitcoin using fiat money on platforms like Bitcoin Loophole. After purchasing this virtual asset, you can send it to your digital wallet, where you can store it or pay for services and goods with it. To know more you can click here
But some investors are unsure whether Bitcoin is a viable investment. Also, some financial or investment advisors don't know how to talk to investors about Bitcoin. If interested in convincing your clients to invest in this digital asset, here's how you can go about it.
Explain Bitcoin's Volatility
Before investing in this cryptocurrency, your clients should understand that it's a volatile asset. Bitcoin's volatility is around 85%, making it over six times more volatile than physical gold. It's also about 5.5 times more volatile than the UK shares.
But volatility begets mean reversion. For instance, a significant move-up price signals a potential reversal down instead of a buying moment. Unfortunately, commentators misunderstand this, yet it's the capital markets' foundation principle.
Explain Bitcoin's Potential
Every investor wants to put money where they can generate maximum returns. Some crypto-geeks might take the investment conversation to unusual cryptocurrency. However, you can focus on Bitcoin when talking to investors about Bitcoin. Bitcoin has remained the best-performing cryptocurrency over the years. Its adoption and usage are also growing globally.
Ethereum follows Bitcoin in popularity, yet its market cap is less than half that of Bitcoin. Therefore, focusing on Bitcoin's potential and its technology could convince investors to put their money in this digital currency.
Explain Bitcoin Investment Risks
Don't focus on the positive side of a Bitcoin investment only. Instead, highlight the risks of putting money into a crypto investment. For instance, tell investors how they could lose money by investing in a fake crypto exchange. Also, explain how governments could hinder the growth of Bitcoin usage.
Nevertheless, don't give investors a reason to ignore Bitcoin as an investment. Explain that they should consider Bitcoin as a tiny part of their portfolios. For instance, investors can take advantage of Bitcoin's volatility to profit from trading it.
Explain the Bitcoin's Pricing Approaches
Currently, there's no clear way to determine whether Bitcoin's value will increase or decrease. However, some market factors or events influence the price of this digital asset. Bitcoin is not an asset with data points for predicting its future value. Therefore, investors should focus on events that may affect cryptocurrency prices and performance when trading Bitcoin.
Bitcoin is a new digital asset that many investors don't know whether it's a good investment. However, financial advisors should understand how this virtual currency works and its potential and risks to convince investors to invest their money. Ideally, an investment advisor should sound knowledgeable or professional to persuade investors to put money in Bitcoin.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes