Investors who have gotten comfortable with some of the most common investment assets (stocks, funds, real estate, etc.) rarely venture into uncharted territory. New and unique investment assets, while novel and sometimes highly profitable, also carry a lot of risks. And they require investors to develop an understanding of a new market.
This is one of the reasons why so many investors don’t bother with Bitcoin and other cryptocurrencies. Bitcoin is a unique asset (compared to conventional assets), and even though it’s technically a digital currency, investing in it bears little resemblance to forex trading. And to make matters worse for a simple retail investor, it’s super volatile.
Right now, Bitcoin is soaring at an unprecedented rate. Crypto investors are speculating whether it will continue to push forward and hit the $100,000 mark or crash and burn to $0.
The case for $100,000
People have developed a new appreciation for the internet and new technologies during the COVID. The internet played a huge role in keeping our societies functioning, despite severe lockdowns. Just imagine how the retail industry would have fared without the internet in a strict lockdown?
Therefore, people have started seeing Bitcoin in a new light. It’s also attracting the eyes of institutional investors who are considering it as a hedge against inflation. The U.S. dollar’s decline is another reason for the rise of Bitcoin.
As for the Bitcoin rising to $100,000, there is a strong possibility that it might. Apart from some small fluctuations, this crypto has been going up since April 2020. If it keeps up this momentum and the investor sentiment doesn’t shift, it can rise to $100,000.
The case for $0
On the flip side, Bitcoin is just as likely to crash and burn. Its volatility comes from the speculative nature of the crypto market and the fact that global politics and regional legislation regarding crypto are also considerable (but unpredictable) valuation factors. The value can also come down if some major players “spill” their digital wallets and flood the market with crypto.
A stable investment
If you are looking for a stable company to invest in, with tangible assets and a decent footprint, you may consider Park Lawn (TSX:PLC) stock. It’s the largest company in the grim business of funeral services, cremation, and cemeteries in the country. Its operation is more extensive in the U.S. (with 199 locations in 15 states) than in Canada (39 sites).
Since it owns and operates both cemeteries and crematoriums, the company will likely thrive regardless of a general shift from traditional burials to cremations in the U.S.
It’s quite overpriced, as most stable growth stocks tend to be, but an upcoming market crash should push its valuation down to more palatable levels. But even now, its 10-year CAGR of 18.9% might be worth the price, provided that the company can keep this growth pace up.
Bitcoin is a powerful growth-oriented asset. If you understand the crypto market and are not afraid of the risk, Bitcoin can be a once-in-a-lifetime bet. But it’s just as likely to lose your money as it is capable of making you rich. A relatively safer way to dip your toes in this market would be to consider crypto assets that are not as overpriced as Bitcoin is right now.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Adam Othman has no position in any of the stocks mentioned.