If you are invested in a portfolio of stocks, bonds, exchange-traded funds (ETFs), and/or mutual funds, should you add an element of cryptocurrency to your asset allocation? In this Fool Live video clip, recorded on March 18, our Chief Growth Officer Anand Chokkavelu asks cryptocurrency expert Nic Carter why investors should consider adding Bitcoin (CRYPTO:BTC) to their portfolios.
Anand Chokkavelu: Well, Nic, as our name suggests, we’re a motley group of investors, but most of us are primarily investors in the stock market. I’d venture that most of our members and readers and viewers don’t own any Bitcoin or other cryptocurrency. Can you make the elevator pitch for why someone should consider Bitcoin?
Nic Carter: Well, I would say, first of all, it’s a bet on a novel monetary system, and if that’s interesting to you, if you are disaffected with the existing monetary system and you’re looking for some alternative monetary rules that are non-discretionary, that strip human decision making from that system, then you might find Bitcoin attractive. If you are really interested in non-state stores of value like gold, you might want to give Bitcoin a look. But it’s certainly a pretty novel thing. It’s outside of a lot of people’s comfort zone. I’m not suggesting that it should be a part of everyone’s portfolio or anything like that. But first and foremost, it’s a bet on a new monetary system. Then beyond that, it’s an index on the growth of this crypto economy, which has now dramatically grown, and Bitcoin is a way to get exposure to that. So it’s a growth bet, and then in many ways you could think of it as a hedge, although it doesn’t always behave as one.
Chokkavelu: Right. Being less than 20 years old, it’s hard to get the data on all of that correlation type of things.
Carter: Yeah, it’s only been around really for 12 years. It’s only meaningfully been financialized, I would say, since 2014, 2015. Frankly, we don’t know what the correlation characteristics are of Bitcoin, what they’re going to be in the long-term. But to me it’s sufficiently interesting that I decided to spend my career on it.
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