Bitcoin is one of the few alternative assets that provide investors with a shot at recording massive ROI. Many regular investors are mostly stuck with low performing assets such as mutual funds, bluechip stocks, treasury bills, and bonds among other things. Interestingly, investors with 401(K) plans have it worse because their fund managers rarely take risks and they load up the portfolio with low-risk low-reward assets.
However, if you have successfully rolled over your 401(K) into Bitcoin, congratulations are in order. Many people are stuck with low-performance 401(K) plans that can only boast between 5% and 10% returns on the best days. In fact, Time notes that the average 401(K) might only return 4% going forward and investors should not look forward to decent gains in their retirement funds. This piece explores some of the upside potential that could make you financially secure during retirement.
You can expect increase volatility
The first thing you should understand now that you have rolled your 401K to Bitcoin is that you’ll witness increased volatility in your retirement fund. Your 401K plan would have been filled with “stable” assets such as mutual funds, T-bills, bonds, and traditionally blue-chip stocks. Hence, you might have been used to a stable portfolio that doesn’t record many changes in price and volume movements.
However, with a Bitcoin IRA Account, your portfolio might record wild swings in response to volatility trends in the underlying Bitcoin market. For instance, Bitcoin is currently trading around $605 whereas it was trading around $575 in August and it traded around $700 in July. Interestingly, Bitcoin was trading around $230 in October 2015; yet, it was trading above $1,100 just two years ago. In essence, new Bitcoin investors should be ready to see relatively bigger price movements.
You can expect a predominantly upside potential
Despite the fact that your Bitcoin Self-Directed IRA might record increased volatility in relation to your old 401K plan, you can expect the volatility to tend towards a predominantly upward ascent. Bitcoin is a digital money that is free from the influence of governments, central banks, and monetary agencies. The upside potential of Bitcoin lies in the fact that it is a finite supply of money.
Only 21 million units of Bitcoin can be mined and its value tends to increase as its influence as acceptability continues to grow. Geir Solem, chairman of Cryptor Trust, a think tank and investment group notes that “Bitcoin is the leading currency of the Internet and is very deflationary because of its limited supply of 21 million coins”.
You can expect massive ROI
Thirdly, buying a Bitcoin Investment Trust means that you can expect a relatively bigger ROI on your retirement fund than if you had maintained your 401K plan. Bitcoin is currently still in the early days of its life cycle; hence, you can expect bigger gains as the asset continues to mature.
Solem also notes that “Bitcoin has the potential to disrupt markets like e-commerce, gold, remittance, etc. If Bitcoin takes over one-third of the world’s remittance market, the price of the Bitcoin would conservatively go to more than $20,000.”
The NYSE Bitcoin Index (^NYB), which tracks the Bitcoin market has already gained 41.3% in the year-to-date period. In relation the S&P 500 has only gained 5.18%, the Dow Jones Industrial average has gained 3.98%, and gold has scored 23.43% year-to-date gains as shown in the chart above.