in this month news letter we will share the last article from www.money.ch related to the latest trends on long-term investments in technology where we shared a slice of our thesis.
Long-term investment in technology and digital assets,TRENDS!
Long-term investment in technology remains at the center of attention and intertwines its path with digital assets. Let's see what the trends and narratives might be.
Long-term investment in Tech is taking center stage again, showing interesting trends. As JP Morgan writes in its latest Long Term Capital Market report, lower valuations and higher yields mean that today's markets offer the best long-term returns in over a decade.
However, this has required a collapse in stock and bond markets, as observed in the report. After a year of turbulence, fundamentals are still strong, but increasing interest rates, inflation risk, and greater yield dispersion are generating significant volatility.
While JP Morgan expects the inflation surge to ease for long-term growth, Credit Suisse, in its Global Investment Returns Yearbook at the beginning of the year, highlighted the negative influence of inflation on bond and stock yields and questioned (as a historically rare event) whether conditions could return to normal with a reduction in inflation.
The future of long-term investment in technology
Amidst this uncertain landscape, long-term investment in technology emerges. This type of investment aims to profit from opportunities offered by the evolution and adoption of innovative technologies in the long term, with a focus on identifying potential "unicorns," i.e., companies that could become the next Amazon, Apple, or Microsoft, valued at levels similar to the late 1990s.
The strategy is based on the shared belief that technological innovation has the potential to transform sectors, economies, and societies over time, disrupting people's lives and generating opportunities and value for investors.
Long-term technology investment concentrates on companies and sectors operating in emerging technologies considered capable of generating significant economic growth and disrupting traditional business models.
Investors adopting this strategy seek to identify and invest early in companies capable of developing and applying innovative technologies with the potential for rapid growth and becoming industry leaders over time.
This investment strategy requires a long-term perspective of 3 to 5 years and patience to withstand short-term market fluctuations. Since many emerging technologies are still in development and adoption phases, it may take time before involved companies reach their full potential.
Long-term investors seek to capitalize on this future potential by supporting technology companies throughout their growth and development journey.
However, it is important to note that long-term technology investment also comes with risks. As many companies operate in high-innovation and competitive sectors, some may not achieve the expected success. To mitigate these risks, it is important for investors to opt for a highly diversified strategy, both in terms of positions and managers.
Long-term investment in digital assets by Algo Capital
Therefore, research, diversification of investments, and conscious risk management are fundamental for investors.
Algo Capital is one of the long-time investors in technology, with a keen interest in long-term investment in technology, particularly in digital assets.
Their investigative spirit is akin to those who, at the dawn of the digital era, sought to identify startups destined to become the unicorns of the future and invest in them.
However, the context is different today. For many, Bitcoin may seem like the most attractive investment in terms of marginality. Still, Bitcoin is not precisely an investment in technology; rather, it serves as an alternative to gold, with Satoshi Nakamoto's currency often compared to a store of value.
Algo Capital, on the other hand, has researched and understood the best players and funds that invest in digital assets worldwide and invested in leaders for each strategy and sector, identifying companies that have grown up to 1000% in past years.
The future of digital asset trends
Looking ahead, the question is, what trends are worth attention in the digital asset world? Some of the most compelling trends include Web3, staking, NFTs related to digital identity and contracts, the metaverse or virtual reality, and other blockchain-related developments.
In recent years, the digital asset market has been driven by the evolution of technologies centered around blockchain. One such development is Web3, which envisions a decentralized and user-centric Internet. Built on blockchain technologies, Web3 promises to overcome the limitations of the current web, enabling users to control their own data and digital identities.
With Web3, individuals can interact with services, apps, and platforms without relying on centralized intermediaries. This new decentralized infrastructure has the potential to radically transform various industries, including the digital asset market.
Another increasingly common practice in the digital asset market is staking, where investors lock their cryptocurrencies in a wallet or on a specific platform to support the operations of a blockchain. In return, investors receive rewards in the form of additional cryptocurrencies. This consensus mechanism, widely used by networks like Ethereum, allows investors to passively earn from their cryptocurrencies, while also incentivizing the security and stability of blockchain networks, resembling a sort of fixed income/bond of digital assets.
Ethereum, in particular, has become one of the most important and influential blockchain platforms in the digital asset market. Thanks to its ability to support smart contracts, Ethereum offers developers a flexible environment to create decentralized applications (DApps) and custom tokens.
Smart contracts enable the automatic execution of agreements and transactions securely and transparently without the need for intermediaries. This feature has given rise to an ecosystem of innovative projects and decentralized applications, creating new opportunities for investors.
Finally, Non-Fungible Tokens (NFTs) have recently captured the attention of the digital asset market. NFTs are unique and indivisible digital representations of assets, such as digital art, videos, music, and more. Thanks to blockchain-based smart contracts, such as those on Ethereum, NFTs enable authentic digital ownership, transferability, and traceability, opening new scenarios with unique possibilities for monetization and interaction.
While many associate NFTs primarily with digital art, they can also be applied to real estate, allowing partial ownership and receiving rental income for that specific portion, among many other possibilities.
In summary, the growth prospects of the digital asset market are promising. The adoption of Web3 and the widespread use of blockchain technologies will continue to transform the financial industry. Simultaneously, the ability to earn through staking will encourage investors to hold cryptocurrencies, contributing to the security and reliability of blockchain networks. Additionally, NFTs are opening up new possibilities for the digital market.
As for the question "what will be the dominant trend in digital assets?" the answer is yet to be written. The current trends and narratives remain in place, awaiting the emergence of the dominant one that can attract the largest number of investors.
Digital Assets technologies are in constant (r)evolution; stay tuned to stay updated.
The Millennials Multi Strategy team