In today’s issue, Christopher Jensen From Franklin Templeton has cut off some of the noise and misconceptions about crypto investment in today’s mythology article.
Then, then, PABLO LARGUIA From Senseinode answers questions about staking rewards to ask an expert.
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Myth Busting: 3 Investors are still incorrect about crypto
Cryptocurrencies have been for more than a decade but remain misunderstood by the investment community. In this article, we delete some of the biggest myths about the crypto to help you evaluate opportunities and risks.
Myth #1: “Crypto investment is complicated and confusing.”
The expectation of dealing with digital wallets, private keys and irregular crypto exchanges has led to many traditional investors who believe that crypto investment is beyond them. However, the arrival of Crypto Exchange-Traded Products (ETP) in 2024 presents investors with a new Avenue to access digital assets in a familiar investment vehicle.
In crypto ETPs, investing in digital assets such as Bitcoin has become as simple as buying shares of a stock. Investors can buy Bitcoin and Ether ETP through their regular broker accounts, just like any other security. It eliminates the need to set up and manage cryptocurrency wallets with an exchange, making crypto access to a wider audience. Moreover, these ETPs are controlled financial products, providing additional security layers for investors. Although there are certainly many facts behind the former crypto adage, “not your keys, not your crypto,” the popularity of crypto ETPs proves that self-custody doesn’t have to be the only way to gain crypto exposure.
Myth #2: “It’s too late to invest in Bitcoin-I miss the run-up.”
While Bitcoin has seen a huge price appreciation, the idea of ”late” to invest is wrong. In fact, bitcoin remains in the early stages of institutional and mainstream adoption, with significant potential for future growth.
At approximately $ 1.7 trillion, Bitcoin market capitalization is less than 9% of gold (~ $ 19.4 trillion) and a smaller part of stock, bond and real estate market. If Bitcoin continues to get traction as a value store, medium exchange or asset reserves, its market cap can expand significantly.
Bitcoin’s hard-capped supply of 21 million makes it natural to get-up-94% of all BTCs have been mine, and more 20% can be permanently lost. Meanwhile, the rate of release of Bitcoin, if not known as “block rewards,” has been apart for almost four years, which means that the new supply will continue to retreat as demand grows, especially from institutional investors.
Launching products exchanged by BTC exchanges just a year ago the records were damaged, with a combined flows of more than $ 35 billion-the fastest growing ETP launch in history. These products provide institutions and retail investors that look alike, seamless accessing bitcoin, speeding mainstream.
The recent changing presidency in the US began with a more desirable stance on digital assets. The rules that sometimes impede adoption are evaluated, opening the door for greater institutional participation. On March 2, the administration announced that it was moving forward the creation of a crypto strategic reserve That will include five main coins – Bitcoin (BTC), Ether (Ether), Ripple (XRP), Solana (Sol) and Cardano (ADA). In addition, 18 US states are actively evaluating the Bitcoin Reserve adoption, while a total of 33 states consider the law to promote their own Bitcoin reserves. It emphasizes the growing recognition of Bitcoin as a legitimate financial property.
Another major shift is the recent abolition of Sab 121, which eliminates a major regulation that interferes with crypto adoption by placing the way for banks that are easier to take care of Bitcoin and digital assets. It can unlock significant institutional demand and further combine Bitcoin with the financial system.
Bitcoin is at an early adoption. The small market size associated with traditional possessions, supply of barriers, institutional momentum and emerging regulations of all suggest that the opportunity to invest is far from surface. While previous price appreciation does not guarantee future returns, the narrative that the best bitcoin days behind it ignores the wider macroeconomic and institutional gaming trends.
To read the entire article on the Franklin Templeton website, click Here.
All investments involve risks, including the possible loss of the principal.
Blockchain and Cryptocurrency investments is subject to a variety of risks, including the inability to produce digital asset applications or to exploit applications, theft, loss, or destruction of cryptographic keys, the possibility that digital possession technologies may not be fully implemented, cybersecurity risk, conflicting intellectual properties, unique and unselfish intellectuals, regulation. The speculation -trading in bitcoins and other forms of cryptocurrencies, many of which have shown intense price volatility, carries great risk; An investor can lose the full amount of their investment. Blockchain technology is a new and relatively unspoken technology and can never be implemented on a scale that provides recognizable benefits. If a cryptocurrency is considered a security, it may be considered violating the laws of federal security. There may be a limited or no secondary market for cryptocurrencies.
–Christopher Jensen, head of research, Franklin Templeton Digital Assets
Ask an expert
Q. Why are staking rewards often seen as a form of investment?
A: Many see staking as passive income because returns are often expressed using the annual percentage (APY). However, the source of income is not from interest; Instead, it generated the income obtained for performing critical network security activities.
Q: Why is security operating, not an investment?
A: The UK Treasury has recently made it clear that staking is not an investment scheme but rather a major security and service of the cryptographic that is essential for validating transactions in a proof-of-stake (POS) blockchain. Staking is a security function that participants are safely decentralized networks and are rewarded for effectively doing so. Protocols such as Ethereum define validator rewards through the available public mechanisms, such as EIP-2917.
While staking rewards can be predicted, they change based on validator performance and network conditions. Recognizing staking while the blockchain security spine ensures a policy framework that aligns with its real role.
–Pablo Larguia, founder and CEO, Senseinode
