Since 2017, the most noticeable characteristic of cryptocurrencies has been volatility. It’s this characteristic that has excited both traders and investors, as they look to profit from extreme price swings.
But here at IFINA, we believe crypto volatility will become less extreme as time moves on. The reason is simple – as institutions, governments and regulators move into the crypto space, they’ll take steps to ensure price stability.
A good example of this comes from Facebook. As you likely know, the firm (in cooperation with other major companies) plans to launch its own cryptocurrency called Libra.
It’s a huge undertaking, as Facebook (understandably) faces scrutiny from regulators about how it plans to implement Libra.
There have been further developments this week. Facebook revealed which traditional currencies it plans to use to back Libra. Specifically, over half of Libra will be backed by reserves of the euro, British pound, US dollars, Japenese yen and Singapore dollars.
The intention of using these traditional currencies is to ensure that Libra doesn’t experience the kind of volatility that has plagued the likes of Bitcoin.
So if cryptocurrency volatility continues to become less extreme, is there still a case for investment?
Our answer is an emphatic yes. Many investment fund managers we know are excited about an important transition in the cryptocurrency space: namely, moving from speculation to mass utility.
There is significant upside potential for cryptocurrencies that are utilised by the masses. Facebook Libra could be the first to achieve that.
Interested in creating your own cryptocurrency investment fund? Just email me back and we can book a no-obligation Skype call at a time that’s convenient for you.