Despite classifying bitcoin as the best performing asset in 2020, Wells Fargo said in a recent report that the industry is still predominated by speculation rather than traditional investing. The large US multinational financial services company compared BTC with the gold rush in the 1850s.
Bitcoin Shows Similarities With The 1850’s Gold Rush
The San Francisco-headquartered giant explored the performances of different financial assets through this “wild and crazy year” in its latest report.
The paper asserted that it’s “only fitting” that the best-performing asset group in 2020 “has the craziest-sounding name – cryptocurrencies.” More specifically, the document highlighted the largest digital asset – bitcoin – with its year-to-date increase north of 160%.
However, Wells Fargo warned investors not to “feel left out of these gains” because of bitcoin’s infamous price fluctuations. The organization said that while the asset has indeed outperformed gold and the S&P 500 index over the past three years, BTC holders had to endure a massive “volatile journey to get there.”
“Cryptocurrency investing today is a bit like living in the early days of the 1850’s gold rush, which involved more speculating than investing,” – added the report.
Significant Room For Growth
The paper further insisted that while most investors have heard of digital assets, they continue to steer clear from buying or using them. Cryptocurrencies “attract lots of attention, but not necessarily lots of investment money.”
It’s worth noting, though, that this narrative has started to shift in 2020 and especially in the past few months. Technological companies like MicroStrategy and Square, as well as a US insurance giant, allocated millions of dollars in bitcoin.
The primary cryptocurrency also received recognition from several prominent traditional investors such as Paul Tudor Jones III, Stan Druckenmiller, and Bill Miller.
Wells Fargo admitted that cryptocurrencies have “risen from literally nothing to $560 billion in market capitalization” in the past 12 years. Nevertheless, this cumulative market cap of all digital assets is still about “one-fourth the size of the S&P 500 technology company with the largest market cap.”
Ultimately, though, the organization promised it will discuss more the cryptocurrency industry next year as they provide viewpoints that “every investor should hear.”