The traditional individual retirement account (IRA) has maintained its classic composition through the years. Stocks, bonds, mutual funds, cash and precious metals like gold have all been commonly added to an IRA in an attempt to ensure balance. Gold IRA companies, however, are now starting to expand their portfolios and client offerings. Given the recent widespread popularity of cryptocurrencies, some gold IRA entities have started recommending the addition of Bitcoin cryptocurrency to a retirement account. Here are a few of the main reasons why the shift is happening.
Investor Interest Has Given Crypto Validation
Several factors contributed to the rapid appreciation of bitcoins in 2021. In March 2021, a single bitcoin reached an unprecedented value of 60,000 dollars. It has gone down slightly since then but the price remains above 55,000 dollars. According to analysts, institutional investor interest has contributed to the high price and given the bitcoin legitimacy. In March alone, over 12,000 bitcoins worth about 600 million dollars were moved out of Coinbase Pro – a cryptocurrency exchange platform favoured by institutional investors.
Previously, publicly traded companies like Tesla, Galaxy Digital Holdings, MicroStrategy and others announced that they’d invested in crypto. These changes have led to financial consultancy companies recommending the addition of cryptocurrencies to a balanced investment portfolio. At the end of 2020, Morgan Stanley’s chief global strategist Ruchir Sharma suggested the purchase of some bitcoins for the creation of a stable IRA or portfolio.
Retail Adoption Giving Cryptocurrencies More Legitimacy
The institutional investor interest is not the only reason why gold IRA companies are making a move towards cryptocurrencies. Over the course of 2020 and through the first months of 2021, cryptocurrencies have started establishing themselves as a viable alternative to fiat currencies. They’ve benefited the underbanked segment of the population that grew in various parts of the world over the course of the Covid-19 pandemic. In addition, numerous mainstream entities enabled crypto integration, adding such possibilities to their range of standard services. PayPal and MasterCard were two of the prominent financial service providers that enabled cryptocurrency transactions via their platforms.
In the spring of 2021, Visa followed suit with the addition of a similar solution to its portfolio. All of these announcements have had a cumulative effect on the investment appeal of bitcoin. In March 2021, Citi Bank research projected important financial changes. The forecast stated that the bitcoin could become a preferred currency of choice for international trade. As per the bank analysis, bitcoins are currently at a tipping point for mainstream acceptance, which could become a fact in the foreseeable future.
The Old World Meets New Opportunities
Gold has traditionally been recommended as a solid investment asset to add to a retirement account. It is an excellent buffer against inflation that gains in value when fiat currencies lose their stability. In 2020 and 2021, the bitcoin and other prominent currencies have also shown that they can act as a holder of value (in a manner similar to gold and other precious metals). This characteristic has contributed to hybrid investment approaches involving old-school and new kinds of assets being recommended.
While bitcoins are still considered a relatively volatile form of investment, public perception is starting to change. Adding a small amount of bitcoin to an IRA makes sense and creates diversification. Only time will tell if the trend is going to gain full mainstream acceptance and become the standard as far as individual retirement accounts are concerned.