Bitcoin is a decentralized digital currency that uses peer-to-peer technology to operate without the need for a central bank. Bitcoin uses the blockchain, which is basically a network of computers that manages and records transactions instead of a central hub. Being the first cryptocurrency, Bitcoin is the most valuable and commonly held by investors. It is widely considered “digital gold” because it has many of the same attributes as gold in addition to tangibility. Also, like gold, it is considered a good hedge against inflation. Bitcoin investors believe the currency will gain value against fiat currencies as the supply is set at 21 million coins. This part also has scalability advantages and can be split into very small quantities. Moreover, Bitcoin is portable and can move easily between geographical boundaries. As attractive as Bitcoin may seem, it is important to look at its history and compare it with other investments.


Bitcoin started March 2022 with a price of around $42,335 and has now risen to around $46,994 as of March 28. This 11% growth may seem substantial, but it is very moderate compared to the past. In 2017, the price of Bitcoin rose from $974 to $20,000, showing an increase of 1,950%. Although massive increases have also resulted in massive decreases. One of the most recent crashes took place in May 2021. On April 14, 2021, Bitcoin hit a closing high of $64,000. Only a month later, the price dropped to around $35,000 on May 22, 2021, posting a return of around -45%. Bitcoin’s worst drop occurred on June 19, 2011, when the price opened the day at around $17.5 -99% “flash crash”, leaving the day’s closing price at around a penny.


Such a volatile investment carries extraordinary risks and creates an environment in which an individual can gain or lose large sums of money. Risk-averse investors tend to favor fixed-income instruments over this volatility. The Family Business Fund (FBF) offers a promissory note without the volatility we see in something like Bitcoin. Family Business Fund offers a high yield fixed income investment option by offering Notes with a 15% annual return with a monthly distribution. Alternative fixed income products are not tied to market volatility, helping to flatten your portfolio’s volatility curve. It also gives an investor the ability to generate a stable source of income over time. Returns from this stable source could be used to help offset losses from unpredictable and more volatile investments such as Bitcoin, possibly even providing returns above the hedge of unwanted volatility.

The Family Business Fund and Bitcoin both offer an alternative investment. Alternative investments, in general, typically display a low correlation to the stock market, making both options great potential additions to diversifying a portfolio. Diversification can be used to “spread” investments to limit exposure to a specific asset. This is useful for reducing the volatility of a portfolio over a period of time. Ultimately, where FBF and Bitcoin ratings differ is volatility. There is a lot of uncertainty and unpredictability in Bitcoin and historical price fluctuations show it. Family Business Fund has a constant fixed rate of return of 15% per annum. Regular and reliable returns of 15% each year can give investors more certainty and confidence in their portfolio as a whole.


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