De-risking the Blockchain through Global Diversification
The cryptocurrency market capitalization industry-wide reached $200 billion for the first time in history. This marks a 400% increase from the $40 billion market cap at the beginning of 2017.
Top 3 cryptocurrencies performance
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Reasons behind recent growth and future outlook
There are many reasons for the growth of Bitcoin and other cryptocurrencies:
- Institutional and retail investors are joining the game
- Financial institutions realize the huge potential for technology applications of cryptocurrencies
- Cryptocurrencies are evolving to become safer and more secure in terms of encryption and bespoke algorithms used to protect users identity and their investments
- And many more…
However, what it all comes down to is one simple reason: there is an increasing base of users.
Due to a higher number of active users, each of the above digital currencies are experiencing lower price volatility which is leading to a higher rate of overall growth. In the past, if one major cryptocurrency user sells their digital currencies to “cash in” on profits, prices would dip substantially. But digital currencies like Bitcoin, Ethereum, and Ripple have reached a critical mass where one user cannot affect the prices too much. The end result is what we have experienced in the last 12-months in terms of growth.
You can see on the chart above the volatility of Bitcoin prices have gradually decreased in the past 6 years to current all-time lows. Even though we won’t be seeing 1500% price increases per month like the past, we can still expect prices to increase at reasonable rates. We also believe that as prices stabilize for a particular cryptocurrency, the market capitalization and active user-base will increase accordingly.
Reducing risk while investing in cryptocurrencies
Despite all this hype surrounding cryptocurrency, at the end of the day it is a highly speculative investment. If you believe in the future of cryptocurrencies but want to find the least risky way of investing in cryptocurrencies, one of the best ways of achieving this is by investing in an investment company that manages a diverse portfolio of different cryptocurrencies.
Global Blockchain (TSX-V: BLOC) is one such company that we follow very closely. The company invests in a basket of holdings within the blockchain space, managed by an expert team of industry pioneers. There are the 3 key reasons why we like Global Blockchain:
- Senior management includes founders and early adopters of all major cryptocurrencies as well as the creators of the Initial Coin Offering (“ICO”) revolution
- The company’s portfolio is diversified, consisting of blue-chip digital currencies and well as some speculative ones. So even if one digital currency declines, it won’t affect the overall pie too much.
- The company owns 49% of CoinStream, a digital currency mining company positioned to become the world’s first cryptocurrency streaming company.
On November 7, 2017, the company completed a $30 million private placement with Canaccord Genuity Corp as lead underwriter. The net proceeds will go towards general corporate purposes.
Then 2 days later announced another $10M upsize of previously announced bought deal private placement.
We expect to follow this company closely, so stay tuned for more updates.