Unlike Bitcoin, UK share markets haven’t had a year to celebrate in 2020. The FTSE 100 has fallen by a double-digit percentage since January 1. And plenty of top quality stocks have been caught in the bloodbath along with genuinely vulnerable companies.
The performance of the Bitcoin price in 2020 couldn’t have been more different. The world’s bellwether digital currency soared to new record peaks above $27,800 this week. Prices have retraced in recent hours, but Bitcoin still remains 273% more valuable than it was at the start of the year.
Plenty of analysts reckon the Bitcoin price should continue to ascend. Jehan Chu, co-founder of Kenetic Capital, reckons the cryptocurrency will hit “$30k levels by mid-2021”. And he’s one of the more cautious Bitcoin forecasters.
Watch: Bitcoin soars to new record, 2020 rally powers on
The Bitcoin bulls
Nigel Green, chief executive of deVere Group is also bullish over the Bitcoin price looking ahead. He reckons that “the future of money is cryptocurrencies” and that increasing inflationary fears following the Covid-19 crisis have boosted interest in digital currencies.
Green notes that huge institutional interest from Wall Street firms and international payments companies has helped bolster consumer interest in Bitcoin. And he reckons that demand from wealthy institutions and individuals will keep on growing. A recent deVere Group survey suggests that “three-quarters of high-net-worth individuals will be invested in cryptocurrencies” by 2022.
Why I’ll be buying UK shares instead
I can’t disagree with everything that the Bitcoin bulls say. Crypto assets like this could well thrive as the digital revolution takes off across the globe. The sea change in interest from institutional investors in 2020 is another reason why Bitcoin prices could keep on climbing.
But I still won’t be buying the digital currency myself. Of course, UK share markets are no strangers to extreme volatility. As I say, the FTSE 100 has dropped more than 10% since the start of the year. But the sort of collapse we’ve seen in 2020 only tends to happen during periods of extreme economic, political or social stress. Bitcoin prices, by comparison, can plummet for no good reason.
There’s far too much uncertainty for me concerning Bitcoin as an asset class. And this vagueness stretches beyond where prices will be a month from now. Debate rages on over what one of these crypto coins is actually worth and what you’re actually getting for your money. The same can’t be said for UK shares. When you invest your cash here, you know you’re buying a piece of a living, breathing company. This is something tangible that also gives investors the chance to receive dividends. Bitcoin ticks neither of those boxes.
Why gamble with Bitcoin, then? Long term, UK share investors tend to enjoy an average annual return of 8% to 10%. Those who buy following the 2020 stock market crash today can make even better returns too. Hundreds of Stocks and Shares ISA millionaires got rich following the 2008 banking crisis by buying low and selling their shares at a premium further down the line. It’s a strategy I believe could make you and I a fortune during the next decade too.
The post Forget the rocketing Bitcoin price! Here’s why buying UK shares is a better way to make a million appeared first on The Motley Fool UK.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2020
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