Bitcoin has been getting more popular. Financial firms that previously rejected cryptocurrency have now embraced bitcoin with open arms.
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More money experts are voicing their support for the cryptocurrency, too — including Mark Cuban. The business mogul has been bullish on cryptocurrencies for a while and, in an April post on X, referred to bitcoin as a better buying opportunity than stocks in the current market.
Here’s what investors should consider before investing in bitcoin.
Robert R. Johnson is a professor of finance at Creighton University’s Heider College of Business. He doesn’t agree with Cuban’s take on bitcoin and invites investors to understand their core motivation for buying any asset.
“The question you should ask yourself in committing funds to stocks or bitcoin is: What is your goal — your motivation? Are you investing, or are you speculating? My belief is that one cannot truly invest in cryptocurrencies; one can only speculate,” he explained.
If you believe bitcoin has long-term potential, then it may be worth an investment. However, if you are only buying bitcoin because it’s been going up lately and has delivered exceptional gains for long-term investors, you need a better reason to buy.
If you can’t come up with a good motivation to buy bitcoin, it’s best to stay on the sidelines.
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Johnson also mentioned another benefit of stocks: You can look at their financials and assess a company’s performance against peers.
“Stocks are more enticing, because they produce something. In other words, if you buy a share of stock, you are entitled to a share of the earnings of a company. Bitcoin doesn’t produce anything,” he explained.
Johnson isn’t the only one with this take. David Materazzi, CEO of Galileo FX, is also skeptical of bitcoin. He views it as a collectible that produces nothing and has no earnings, dividends or output.
He recommended looking at stocks instead of crypto, while explaining the benefits of stock buybacks: “Buybacks increase your stake in a real business. Same earnings, fewer shares. You own more. That’s value,” he said. “Bitcoin has no earnings. No board. No cash. Nothing gets returned to holders. Nothing compounds. It just sits there. Price moves only if someone else wants in.”
