The surging stock market’s commanded most of the financial pages in recent days. News of a step forward in the hunt for a Covid-19 vaccine has sent UK share prices soaring. Both the FTSE 100 and FTSE 250 are at levels not seen since early summer and spring respectively. What’s attracted less attention in the press is the recent upward surge in Bitcoin prices.
Resurgent risk appetite helped carry the cryptocurrency price through the $16,000 marker for the first time since January 2018. It’s fallen $300 from those levels but could be poised for another move higher.
The Bitcoin bounce
The truth is that Bitcoin’s been on the charge for most of 2020. It’s more than trebled in value since the Covid-19-related financial crash ended in the middle of March. And it’s been helped by positive developments that Bitcoin investors hope will boost mass adoption of the digital currency.
Firstly, US payments giant PayPal announced in October it would allow users to trade cryptocurrencies and let them pay for goods using the likes of Bitcoin. Then, this week, the China Construction Bank declared plans to issue $3bn worth of bonds that can be bought using Bitcoin.
These are positive developments in proving the legitimacy of digital currencies, an asset class that continues to draw accusations of having zero inherent value. However, I for one will need to see signs that regulators are giving cryptocurrencies their own seal of approval. This would include news that the US Securities and Exchange Commission has finally agreed to sign off a Bitcoin-backed exchange-traded fund (ETF).
I’m sticking with UK shares to make a million
For the time being, I’m much happier investing my hard-earned money in UK shares. It’s not just because this asset class — unlike Bitcoin — has a long, long history of making investors stinking rich. And it’s also not because share ownership offers investors something clearly tangible, i.e. part of a fully-functioning company.
It’s because UK shares aren’t prone to the constant price swings that have come to define Bitcoin. As 2020 shows, stock markets can also be subject to significant volatility. But the sort of rises and falls we’ve seen this year tend to come around once in a blue moon.
The choppiness we’re seeing in cryptocurrency prices is quite common. And this can wipe out one’s wealth as easily as they can make one rich. What’s more, the huge amount of leverage that Bitcoin often involves significantly increases the risk to investors. There’s no reason to gamble cash with Bitcoin when UK shares are a much safer way to get extremely wealthy.
And one doesn’t have to spend eye-popping amounts of cash to do so. The average annual return that long-term investors tend to enjoy sits at 8-10%. So investing £300 a month over 35 years can, realistically, make a whopping £1.02m. And there’s plenty of top UK shares out to help ISA investors like me hit that magic million-pound marker.
Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended PayPal Holdings and recommends the following options: long January 2022 $75 calls on PayPal Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.