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Opinion: You would have lost less by avoiding crypto stocks and just buying bitcoin

Bitcoin is well decentralized, making it immune to the influence of any single factor. No Bitcoin CEO can make good or bad decisions that affect the price, writes Ethan Lu.Charles Krupa/Associated Press

Consider the 10 largest companies dealing in cryptocurrencies or blockchain on the Toronto Stock Exchange or TSX Venture Exchange. Over the past year, nothing has outperformed Bitcoin, with two exceptions.

Bitcoin has fallen about 40% from last year to this year. But Mogo, the worst-performing large Canadian-listed company, is down 80%.

Then there are the giant crypto companies that would probably be in the top 10 of the TSX, but got left out of the TSX because they performed too badly, like Voyager Digital Ltd., which has fallen 99% over the past year, Filed for bankruptcy.

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Such a poor performance by a regulated public company is clear. It shows that Bitcoin itself has turned out to be a smarter choice for investors looking to gain exposure to the sector. Most crypto stocks are simply not worth buying.

It goes against common sense. Like gold miners and gold prices, crypto stocks go up and down with bitcoin. However, unlike Bitcoin, such shares can be purchased on traditional investment platforms, tools that investors are familiar with. And they can be kept in tax-advanced accounts.

Such strains are also considered safer. A company’s stock is equivalent to tangible stock or stock rather than holding fictitious internet money. Also, instead of buying cryptocurrency himself and trying his luck on his slot machines, it makes sense to buy stocks at casinos that are exchange platforms like his Coinbase Global Inc. in San Francisco, for example. I’m here.

But the company’s stock could be even more volatile than Bitcoin, as it was revealed last week that Coinbase is under investigation by the US Securities and Exchange Commission. whole market.

Coinbase, the largest and most stable cryptocurrency industry, fell 7% on news of the SEC investigation. Bitcoin, on the other hand, was relatively flat on the day, down less than 1%.

These company-specific problems certainly exist in traditional commodity-based companies as well. Suncor Energy Inc., for example, has seen a string of worker fatalities due to ongoing safety issues, and analysts say its stock has risen only half that of some rivals in the recent oil boom. said he didn’t.

But the crypto industry is still young and untested, filled with maverick players who, on their best days, have half the prudence of Suncor’s management team.

The Vancouver company, now known as Green Block Mining Corp., is traded on the Canadian Stock Exchange. Last year, he got into trouble with the Alberta Public Utilities Commission for mining bitcoin without telling anyone or getting the proper permits.

One year after the name was changed, the green block is still dirty. Since his February 2021 peak of around $1.50 a share, the stock has fallen steadily. It currently trades at 5 cents with little correlation to Bitcoin’s price.

Crypto companies also emulate the technology in that most companies, including all of TSX’s top 10, do not pay dividends, while taking over the characteristics of commodity producers.

Cryptocurrencies are also a whole other world where traditional investment principles disappear. Bitcoin is seen as a boring bulwark in its own world, despite its reputation for being more volatile compared to more mainstream investments.

Unlike corporations and other coins, Bitcoin is well-decentralized, making it immune to the effects of any single factor. No Bitcoin CEO can make good or bad decisions that affect the price. Bitcoin is like an index fund for the wider crypto world.

Almost every industry is now in recession and a potential recession is looming. Crypto-focused investors would have lost less if they had ignored all the flashy startups and bought Bitcoin.

If the prospect of dealing with assets in transactions that can never be reversed sounds daunting, there will always be exchange-traded funds like Purpose Investments’ Purpose Bitcoin ETF. None are perfect, but such funds track Bitcoin prices more closely, without corporate drama.

Finally, which were the two outliers? No Which of the top 10 crypto-blockchain companies listed in Canada has performed worse than Bitcoin? Only VitalHub Corp. has actually performed better, down 14% over the past year . Another of his Datametrex AI Ltd. has fallen almost as much as his 40% of Bitcoin.

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