Bitcoin Investments
Bitcoin is a decentralized digital asset that can be sent electronically from one user to another without the need for a middleman such as a bank. It operates on a technology called blockchain, which is a public ledger that records all transactions made with the currency. Bitcoin can also act as an effective hedge against monetary debasement, as the supply of Bitcoin is limited to 21 million coins.
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While fiat currency (think U.S. dollars) can transmit value through space via the existing banking system, it cannot transmit value through time as the effects of inflation and perpetual monetary debasement reduce its purchasing power. Gold can transmit value through time, as has been apparent for centuries in Gold maintaining its purchasing power due to its relatively scarce supply, however it cannot transmit value through space given its physical properties. The discovery of Bitcoin by the pseudonym Satoshi Nakamoto in 2009 allows humanity, for the first time, to transmit value both through space via the internet, and time given Bitcoins absolute scarcity.
At Sovereign Wealth Management, we believe that Bitcoin is a valuable addition to a diversified investment portfolio. While Bitcoin can be a complex and hard to understand technology, we have taken the time and done the necessary due diligence to understand the value that this asset can provide as we progress through the 21st century. We also work closely with our clients to understand their risk tolerance and investment goals to determine a proper allocation, as Bitcoin can be considered a higher-risk, high-reward opportunity.
Who Is Bitcoin A Good Investment For?
At Sovereign Wealth Management, we believe that Bitcoin can be a good investment for individuals who are comfortable with the volatility and risks associated with the digital asset. It is important to note that Bitcoin is not backed by any physical assets or government, and its value can fluctuate greatly in a short period of time.
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However, many investors see it as a hedge against monetary debasement and a way to diversify their portfolio and further protect against the decreasing purchasing power of their dollars over time. Bitcoin can also be a good investment for those interested in the technology behind it, as well as those who believe in its long-term potential.
Bitcoin may be particularly suitable for investors who have a longer time horizon, a higher-risk tolerance, and are comfortable with the idea of the digital asset as part of their investment strategy. As always, it is important to consult with a financial advisor to determine if Bitcoin is the right fit for your individual investment goals and risk profile.
About the Bitcoin Investment Process
Investing in Bitcoin with Sovereign Wealth Management is easier, simpler, and generally safer than buying and taking self-custody of the asset yourself. We understand the digital assets market and the complexities and potential risks that come along with it, as was apparent in 2022. With the lack of regulation, ongoing media narratives, and challenges of self-custody, it can be a very intimidating space for investment, especially for an individual investor.
That’s why we’ve simplified the process for our clients. Instead of directly buying Bitcoin, we invest in publicly traded, SEC-registered companies that hold Bitcoin on their balance sheet as a treasury reserve asset. This allows our clients to gain exposure to the asset class without having to navigate the complex and sometimes confusing world of self-custody as well as the additional risks that come along with using a cryptocurrency exchange. Our approach to investing in Bitcoin is designed to give our clients peace of mind, knowing that their investment is under the regulatory guidance of the SEC. We carefully select companies that have a proven track record of success and a commitment to upholding high ethical standards, as well as a clear plan outlining their Bitcoin accumulation strategy.
We’re confident that our approach to investing in Bitcoin will leave our clients eager to learn more about how we’re allocating to this exciting asset class. If you’re interested in learning more about Bitcoin and how we can help you gain exposure to the asset, simply reach out to us, and we’ll be happy to answer any questions you may have.
The Risks Associated with Bitcoin Investments
While investing in Bitcoin can offer the potential for high returns, it’s also important to understand risks associated with the asset. At Sovereign Wealth Management, we ensure that our clients are well informed about the various risks involved in order to make educated decisions about their investment strategies.
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While most of the risks associated with Bitcoin are not unique to cryptocurrencies, we want to be transparent about the main risks associated with Bitcoin investments. These risks include the following general categories.
Market Volatility
The value of Bitcoin can be highly volatile and experience rapid fluctuations, which may lead to potential losses for investors. Market sentiment, news, and regulatory developments can all have an impact on the price of Bitcoin and the value of investments tied to it.
Regulatory Risks
The legal and regulatory landscape surrounding digital assets like Bitcoin is still evolving, and future changes in laws and regulations could have a negative impact on the value of Bitcoin and investments related to it. This may include potential restrictions on the use, ownership, or trading of digital assets, which could significantly affect the value of your investments.
Security Risks
While investing in publicly traded, SEC-registered companies that hold Bitcoin on their balance sheet may provide a level of protection, there is still the possibility of security breaches, hacking incidents, or other cyber threats that could lead to the loss of the digital assets held by these companies.
Limited Track Record
Bitcoin and other digital assets have a relatively short history compared to traditional investment assets, which makes it challenging to predict their long-term performance and potential impact on a portfolio.
It’s essential for investors to carefully consider these risks and consult with us before deciding to invest in Bitcoin or other digital assets. At Sovereign Wealth Management, we are committed to helping our clients navigate the complexities of digital asset investing and develop strategies that align with their individual goals and risk profiles.
Ready to Get Started?
Are you ready to take control of your financial future? Reach out and schedule an appointment to discuss how Sovereign Wealth Management can help you work towards true financial independence with our comprehensive fiduciary services today.
Cryptocurrency-related products carry a substantial level of risk and are not suitable for all investors. Investments in cryptocurrencies are relatively new, highly speculative, and may be subject to extreme price volatility, illiquidity, and increased risk of loss, including your entire investment. Spot markets on which cryptocurrencies trade are relatively new and largely unregulated, and therefore, may be more exposed to fraud and security breaches than established, regulated exchanges for other financial assets or instruments. Some cryptocurrency-related products use futures contracts to attempt to duplicate the performance of an investment in cryptocurrency, which may result in unpredictable pricing, higher transaction costs, and performance that fails to track the price of the reference cryptocurrency as intended. Please read more about risks of trading cryptocurrency futures here.