The Digital Transformation: Investing Strategies and Opportunities

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Although the digital currency landscape is volatile and constantly changing, there are signs that strong positive momentum for cryptocurrencies can continue as more multi-billion dollar firms put their name and reputation on the line as they get behind bitcoin, ethereum, and others. 

But even amid its rapid growth, some retail investors still feel that cryptocurrency a complicated and risky investment.

TheStreet has assembled an all-star panel of experts to discuss digital transformation, investing strategies, and opportunities. 

This panel includes managing director and head of ETF products at VanEck Ed Lopez, CEO of New Constructs David Trainer, CFA and product manager at VanEck John Patrick Lee, and research analyst for Jim Cramer’s Charitable Trust Zev Fima.

“I think you’re going to have to accept that there will be a risk with certain cryptocurrencies, or with cryptocurrencies in general because they are very new. And they each represent different projects. So, do your research to understand what each platform of currency gives access to, what they’re doing, and what they’re trying to solve,” says Lopez.

“It’s a very nascent part of the investment industry right now and there will be risks, so adjust your risks accordingly. Don’t bet too much, do a small portion of your portfolio to test it out and learn how it trades, and be very diligent by stepping into it over time,” he adds. 

Trainer states that volatility is a unique aspect of cryptocurrency investments that isn’t encountered with stocks or bonds. “I think you’re dealing with a demographic that likes the volatility. If the meme stock phenomenon is teaching us anything it’s that this younger demographic of investors has no fear with respect to volatility. In fact, they flaunt the volatility as a way to test their mettle. They’re going to hold on. So, I think that it’s a game for a lot of folks,” he says. 

The panel agrees that cryptocurrency investing is a game with speculation, but advises focusing farther upstream and focusing on the underlying technology rather than the popular names and most popular trends.

“The concept that I have the hardest time explaining to people, especially the millennial investors, is that you can say you’re investing in bitcoin but the bottom line is that there are no earnings, cash flow, sales, or anything. It is somewhat the greater fool theory and about what the next investor will pay. So, when it comes to investing in this space, there is a struggle to find tangible metrics to look at. At the end of the way, it’s difficult to draw an intrinsic valuation model from it the same way you would with bonds or stocks,” says Fima.