The withdrawal of funds from stocks and precious metals has coincided with the massive price increase of Bitcoin and other cryptocurrencies. It seems that investors have realized that Bitcoin is a more stable ‘store of value’ investment than gold.
CNBC has reported that the stock market has seen the largest withdrawal rate since 2004, with more than $30 bln being taken out of the markets over the past 10 weeks. The major withdrawal also included a huge abandoning of precious metals.
Precious metals at loss
Private client allocation to precious metals has seen a massive reduction, with portfolios holding 10 percent in 2013 being reduced to below two percent in recent weeks.
(source: BofA Merrill Lynch Global Investment Strategy, EPFR Global)
The precious metals investment decline has coincided with a removal of funds from the stock market overall, with investors choosing to pull back from the market, though the market continues to post gains. Concerns about current market levels and monetization policies may be fueling to flight.
Blockchain technology is producing new investment opportunities. Companies like LAToken and MyBit have developed methods for tokenizing investments, making it possible for large-scale investments to be purchased by smaller scale investors.
The decentralized platform of these companies makes it possible for investors to participate without the higher fees associated with traditional markets. LAToken has even produced a system where shares of Apple, Amazon and other blue chip stocks can be ‘tokenized’ and purchased in part by investors. CEO of LA Token Valentin Preobrazhenskiy says:
“We build a NASDAQ on Blockchain with a wider range of tradable assets, blurring the boundaries between crypto- and real economies, and offering our clients a dramatic reduction of listing costs, settlement time, and transaction costs.”
Whether the tokenized asset market is viable or not remains to be seen, but the flight of investors from stocks and precious metals has pressed the need for new and innovative vehicles for investors.