Note: As of March 21, 2024, ByBot Pro has integrated the iShares Bitcoin Trust (IBIT) to represent the Bitcoin asset class, transitioning from the Grayscale Bitcoin Trust (GBTC). As of July 23, 2024, the Grayscale Ethereum Trust is now offered as an ETF on the New York Stock Exchange. Learn more here.
Earlier this summer, ByBot Pro began supporting cryptocurrency exposure within our AI-driven trading portfolios. We are excited to offer our clients diverse options to build their ideal portfolios while embracing the future of financial innovation. However, as part of our commitment to being a responsible partner in your investment journey, we want to provide essential guidance to those considering cryptocurrency investments, whether through ByBot Pro or another platform.
Understanding Cryptocurrency Volatility
Cryptocurrency, as an asset class, is known for its high volatility. This means that the value of digital currencies can fluctuate significantly in a short period of time. For instance, Bitcoin, the largest cryptocurrency by market capitalization, has a history of dramatic price changes, trading as high as $64,863.10 and as low as $9,916.49 within the last year. On May 19th, Bitcoin’s value fell 30% in just one day. While many have profited from digital currencies, the volatility makes them a high-risk investment.
At ByBot Pro, we recognize this risk, particularly in relation to the statutory trusts such as GBTC and ETHE that offer cryptocurrency exposure without direct ownership of the underlying assets. These trusts can introduce tracking errors, where the price of the trust shares might differ from the value of the actual cryptocurrency.
A Thoughtful Approach to Cryptocurrency Investing
We don’t mention these risks to deter you from investing in cryptocurrency. At ByBot Pro, we are advocates for financial innovation and believers in the potential of digital currencies. We understand that many of our clients share this enthusiasm, so we aim to help you approach these investments thoughtfully. Our key advice is to develop an investment thesis—a logical argument for why you believe an investment will increase in value over time.
Unlike traditional investments, cryptocurrency doesn’t produce cash flow, so your investment thesis should be based on research and analysis of its characteristics and potential future economic events. For example, some investors point to Bitcoin’s fixed supply and the possibility of increased demand due to economic factors like deglobalization or generational wealth transfer as reasons for its potential growth. Whether or not you agree with these reasons, we encourage you to base your decisions on sound reasoning rather than speculation or pressure to follow trends.
Building Wealth with ByBot Pro
We’re proud to be the first AI-driven trading service to offer our clients the ability to include cryptocurrency in a diversified, automated portfolio. By leveraging features like tax-sensitive rebalancing and our state-of-the-art trading algorithms, ByBot Pro empowers you to build wealth on your own terms. We hope this guidance helps you navigate the complexities of cryptocurrency investing with confidence, so you can make informed decisions that align with your financial goals.