Digital Assets: A Modern-Day Gold Rush

Today’s surge in digital asset adoptions continues to turn heads among the equity market’s key players – and for more than a reason. Cryptocurrencies, utility tokens, and NFTs represent a new, growing class of investment assets that come with unlimited capital gains opportunities and value potential.

Additionally, due to the accessibility granted by Peer-to-Peer (P2P) investment platforms, digital asset adoption skyrocketed, increasing by 880% in just one year. This surging interest continues to cause dramatic changes, reshaping the stock market as we know it. 

Here at the Mawson Infrastructure Group, we believe that equity markets exist to meet society’s economic needs. As these needs continue to change, and old generations of investors leave space to “digital natives”, digital assets become a more suitable, versatile, and fluid alternative to traditional assets. Here’s what’s happening.

A Modern-Day Gold Rush in Digital Assets

Over the past 11 years, Bitcoin skyrocketed from $0,0008 to $68,521 per coin, and is estimated to reach a whopping value of $500,000 by 2030! Undoubtedly, Bitcoin paved the way to widespread cryptocurrency adoption, and today, there are more than 14,700 cryptocurrencies in existence. 

The number of investors turning to digital assets is also increasing, and the P2P exchange trade volume has risen by 2300% since the end of 2019. As emerging technologies such as Blockchain continue to find new applications in the financial services sector, market sentiment, perceived value, and investors’ trust in digital assets are also increasing. All of this is causing what has been defined as a modern-day gold rush.

Why are equity investors turning to digital assets?

Digital assets come with risks. These assets are not tied to physical assets, and they can fluctuate in no time, reaching impressive value highs and laws in the space of a few hours. In particular, cryptocurrencies are at the mercy of investors’ sentiment and don’t benefit from an established regulatory body. 

However, for high-risk tolerant investors, digital assets come with exclusive benefits that make them a particularly irresistible alternative. Here are some of the reasons why investors are adopting digital assets en-masse.

Portfolio Diversification

Portfolio diversification is key to enhancing capital gains and minimizing losses. That is why most investors will allocate a portion of their investments to different asset classes, such as stocks, bonds, real estate, and even art. 

Investing in digital assets can be an excellent strategy to minimize an investor’s portfolio. Cryptocurrencies, utility or security tokens, and NFTs aren’t subjected to the fluctuations that happen as a consequence of macroeconomic changes. This means that even if the equity market crashes, a cryptocurrency’s value might remain unaffected. It isn’t surprising that Bitcoin was born two months after the Lehman crisis in 2008 and reported its biggest growth after the Covid-19-related market crash in 2020!

Undiscovered Potential

Digital assets have been around for over 10 years, but they are still a relatively young technology. This means that there is a lot still unknown about how they will be used in the future. 

For example, the emerging Blockchain technology was initially used to safely record Bitcoin transactions. However, today, this technology is finding more uses in finance, supply chain, logistics, and healthcare among other markets. 

This means that today’s digital assets come with unexplored and unlimited capital gain potential that is only likely to increase as related technologies become more widely adopted.

Current Market Vulnerabilities

The market crash that shook the world in March 2020 has caused investors to look somewhere to find stability, value, and low volatility. Digital assets are the response to this need. By being independent of macroeconomic factors, carrying unlimited potential, and finding more uses every day, digital assets are a solution to the market’s current vulnerabilities.

Does the Future of Capital Markets Lie in Digital Assets?

At Mawson Infrastructure Group, we believe that the capital markets will continue to evolve to meet the changing needs of investors. Digital assets are emerging and drawing a great deal of attention, but their development is still in its early stages – which means that the real gain opportunities are yet to come.

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Together with EY, we have released a report detailing research on the impact blockchain and digital currency is going to have on the Australian economy.