UBS of Switzerland, one of the world’s largest investment banks offered some advice on February 9th to investors. This advice was about investing in cryptocurrencies with the least amount of risk. The bank suggested that people not invest directly in Ethereum or Bitcoin or other crypto to avoid losses due to market volatility.
This information and other advice were published in a research paper on investment methods and also directly buying cryptocurrency. According to analysts, cryptocurrencies like bitcoin are very volatile and have undermined two key defenses offered by assets. These are as under:
1. The notion that crypto is a good way to diversify and include non-traditional assets
2. Including such assets protects against rising inflation.
While crypto investments are currently considered speculative, UBS analysts say that the technology supporting such assets is still promising. Instead of investing directly in crypto, investors should invest in those companies which build infrastructure for the ecosystem.
This will result in more benefits thanks to the use of applications related to distributed ledger technology.
The second investment strategy could be offered by platform companies that embrace the mentioned applications.
Other ways to invest in crypto indirectly is to buy into companies which have a high stake in blockchain and cryptocurrency futures. This method still involves some level of risk and exposure to market volatility. Most investors these days have diversified portfolios as they invest in ETFs or other index funds with a proven track record.