Why are investors fleeing to Bitcoin and other risky but profitable assets? - Kakiforex.com - Financial Market Media No. 1 in the World Why are investors fleeing to Bitcoin and other risky but profitable assets? Why are investors fleeing to Bitcoin and other risky but profitable assets?

March 24, 2021

Why are investors fleeing to Bitcoin and other risky but profitable assets?

 In our articles on bitcoin and cryptocurrencies, we talked about why the demand for them has increased over the past year. We said that the profitability of many traditional investment tools is too inferior to the profitability of the same bitcoin. Moreover, if we consider bitcoin exclusively as an investment tool, it is also very convenient. For example, a substantial income (50-100%) can be obtained in just a few months. Selling bitcoin, like any cryptocurrency, is not difficult (unlike, for example, real estate or collectibles). Thus, bitcoin grows simply because it is bought. We have already talked about government bonds many times. Their profitability is lower than inflation, even the current (i.e. low) one. Not to mention future inflation, which will inevitably continue to accelerate thanks to the trillions of dollars poured into the US economy. Is it any wonder why US government bonds (as well as EU countries) are sold off by investors? Their price falls, and the yield (nominal) increases, as this is the only way to attract additional funds to the government with this tool. However, about the same applies now to the stock market. We decided to analyze the profitability offered by the world's leading technology companies and find out whether it makes sense to invest money in them now.


First on the list is Apple. Its offer is 0.68% per year. If you want to buy Apple shares to receive quarterly payments, then you will have to buy a lot of them to at least feel the payments from Apple in your pocket. Microsoft offers about a 0.9% return. Tesla - generally pays an absolute meager amount or does not pay at all. Thus, we can draw an almost unambiguous conclusion. The main return on a stock is not in dividends, which are also usually below inflation. Of course, there are plenty of companies that offer dividends of 3% or more. However, such companies do not belong to the technology giants. The main point in buying shares of Tesla or Apple is to increase the value of these shares. That is, the investor, buying shares now, practically guarantees himself a high profit when selling these shares in 5 years. However, what ensures the continuous growth in the value of shares? What is the reason for the constant new issues of shares? Only in demand. That is, the stock market is now about the same as the cryptocurrency market. Bitcoin is growing because there is demand for it, and the shares of tech giants, which make up most of the leading stock indexes, are growing because there is demand for them. The investor's profit is the difference between the sale price and the purchase price of the shares. That is, as long as the shares or bitcoin are not sold, they do not bring any profit to their owner. Therefore, both assets can be classified as purely "speculative". And the forecast for them can be made approximately the same growth in the long term.


It is worth noting that the shares of Tesla at this time can not overcome the resistance level of $ 708, and Apple shares are trying to start a new upward spiral, but so far also unsuccessfully.