In today’s issue, Christopher Jensen from Franklin Templeton cuts through some of the noise and misconceptions about crypto investing in today’s myth-busting article.
Then, Pablo Larguia from SenseiNode answers questions about staking rewards in Ask an Expert.
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Cryptocurrencies have been around for over a decade but remain largely misunderstood by the investment community. In this article, we dispel a few of the biggest myths about crypto to help you assess the opportunities and risks.
Myth #1: “Investing in crypto is complicated and confusing.”
The prospect of dealing with digital wallets, private keys and unregulated crypto exchanges has led many traditional investors to believe that investing in crypto is beyond them. However, the advent of crypto exchange-traded products (ETPs) in 2024 presents investors with a new avenue to access digital assets in a familiar investment vehicle.
With crypto ETPs, investing in digital assets such as bitcoin has become as simple as buying shares of a stock. Investors can purchase bitcoin and ether ETPs through their regular brokerage accounts, just like any other security. This eliminates the need to set up and manage cryptocurrency wallets on an exchange, making crypto accessible to a wider audience. Moreover, these ETPs are regulated financial products, providing an additional layer of security for investors. While there is certainly a lot of truth behind the old 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 missed the run-up.”
While bitcoin has seen substantial price appreciation, the idea that it’s “too late” to invest is misguided. In reality, bitcoin remains in the early stages of institutional and mainstream adoption, with significant potential for future growth.
At approximately $1.7 trillion, bitcoin’s market capitalization is less than 9% of gold’s (~$19.4 trillion) and an even smaller fraction of the stock, bond and real estate markets. If bitcoin continues gaining traction as a store of value, medium of exchange or reserve asset, its market cap could expand significantly.
Bitcoin’s hard-capped supply of 21 million makes it inherently scarce — 94% of all BTC has already been mined, and as much as 20% may be permanently lost. Meanwhile, bitcoin’s issuance rate, otherwise known as its “block rewards,” halves roughly every four years, meaning new supply is continually shrinking while demand grows, particularly from institutional investors.
