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Oil prices have risen considerably in recent months, with gasoline prices reaching seven-year highs. When increasing inflation is considered, the ramifications for the recovering economy might be far-reaching, causing individuals to search for a hedge against it. Cryptocurrencies have recently arisen to fill that vacuum.
In a recent interview with Yahoo Finance, Rice Edelman, Chairman of Edelman Financial Engine Executive, expressed his dismay at Wallstreeters shrugging off the oil concern. However, he also mentioned how institutional investments and government interest in crypto are turning these investments mainstream.
“We’re going to see more regulation and legislation, all of that very healthy. We’re seeing mainstream Wall Street organizations getting involved. It ain’t going away… I think in the next few years, it’ll be a routine part of most people’s portfolios.”
Already, millions of people worldwide are shifting focus from traditional investments tools towards digital assets. In a recent report, it was noted that 17% of the adult American population owns at least a share of Bitcoin. Moreover, a CNBC survey published last month found out that millennials and Gen Z investors are more likely to invest in crypto, with half of the millennial millionaires having invested 25% of their wealth in these digital assets.
That is not the case for older investors, however, as they prefer to keep their crypto-investments small in case things go south. This was reiterated by Edelman who said,
“You don’t need to invest a lot for it to have a material impact on your portfolio. And a mere 1% allocation, if something goes wrong, it won’t harm you either.”
In an earlier interview too, he had expressed the opinion that shifting 1% from stocks to crypto out of the traditional 60 stocks/40 bonds allocation model would provide investors with enough diversification without undertaking heavy risks. Although, with the Bank of America declaring this standard portfolio dead, alternative investments like digital assets just might find a place beyond the 1% being slated for them.
Allowing crypto-asset ETFs to trade on stock exchanges may overcome Wall Street scepticism and encourage older generations to adopt. However, since the SEC has repeatedly delayed approving the first Bitcoin ETF, a variety of investment options for crypto-enthusiasts have arisen. According to the executive, this task may simply be delegated to fund managers such as Bitwise and Grayscale, who trade the assets over the counter (OTC).
Investors can even turn to Coin and DeFi funds that are run by these firms since they have steadily added new products over time with the boom in adoption. The Grayscale BTC Fund had $21.5 billion AUM at the time of writing, with its share price increasing by 165.44% in the past year. Brushing the need for ETFs aside, the top financial advisor added,
“So there are increasingly a wide variety of investment opportunities. In other words, the investment community is no longer waiting for the SEC to approve of an ETF. There are other ways you can engage. You don’t have to wait for an ETF anymore.”
Adelman also urged investors to learn about the technology underlying the assets, recommending Bitcoin and Ethereum as viable choices. Dogecoin, which remained the market’s sixth most valuable cryptocurrency,
“I would completely ignore Dogecoin. That is nothing more than a joke. It’s a scam and it’s going to be something that ends very badly.”
The joke coin gained popularity and had a huge rise early this year when Tesla CEO Elon Musk consistently supported it on Twitter. However, the asset’s popularity was short-lived as it suffered losses over the last several months, dropping over 32% of its value in only the last 30 days. The coin was down more than 69 percent from its all-time high of $0.731 in May, with sell-offs indicating that investors were exiting the market.