It seems that the more cryptocurrencies enter the field, the more the new industry disrupts the existing investment framework. According to a report by Coin Telegraph, the stock market has witnessed the largest withdrawal rate since 2004. In just 10 weeks, investors have pulled more than $30 billion out of the markets. The withdrawals have included a major shift away from precious metals. At the same time, cryptocurrencies are climbing to new record high price points all the time. Could it be that investors have shifted their thinking toward digital currencies as more secure “store of value” investments than precious metals like gold?
Precious Metals See Allocation Reduction
Portfolios that held 10% precious metals in 2013 have been reduced to 2% on average in just the past few weeks. This shows that private client allocation toward precious metals has dropped dramatically, and in a very short span of time. As investments in precious metals have dropped, so too have funds been pulled from the overall stock market. Investors have removed their assets from the stock market even as the market has posted gains. Further impacting the tendency among investors to run from the stock market might be concerns about current market levels and upcoming monetization policies, too.
New Investment Opportunities in the Crypto Space
Beyond the potential reasons why investors might be looking to get away from the stock market and precious metals, there are plenty of justifications for moving toward the crypto space. Blockchain technology has exploded onto the scene, creating numerous new types of investment opportunities. There are companies now which aim to tokenize investments, allowing for large-scale investments to be purchased collectively by investors with smaller appetites. Companies such as LAToken and MyBit are among those that have begun to explore this territory. As these companies are decentralized, they allow investors to participate in the investment process without being subject to higher fees that plague traditional markets. LAToken in particular has generated a system by which shares of blue chip stocks like Apple (AAPL) and Amazon, Inc. (AMZN) can be tokenized and purchased in part. The CEO of LAToken, Valentin Preobrazhenskiy, says that his company has built “a NASDAQ on blockchain with a wider range of tradable assets, blurring the boundaries between crypto- and real economies, and offering our clients a dramatic reduction of listing costs, settlement time, and transaction costs.”
It’s unclear whether models like LAToken’s will be viable over the long term. Nonetheless, the fact that investors are pulling their assets from the stock market suggests that there is space for new systems like this one. With blockchain and crypto technology advancing and changing all the time, there are sure to be new opportunities as well.
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