Question

You are hired by GDP Consulting Ltd to provide a blockchain and cryptocurrency analysis. Your group is required to provide an overview of the cryptocurrency Litecoin and analyse an investment opportunity associated with that currency.

Answer the following questions

1. How would you advise institutional investors/hedge fund managers to approach crypto-investment?

2. Will cryptocurrencies increase (decrease) the risk of their investment portfolios?

Answer 1

A. I will be advising the we fund managers to approach the crypto investment from the longer perspective because this is a highly volatile currency and this will be prevailing in the long run so investors who are looking for a tactical shift in the overall way of doing transaction in the global economy will be investing into this for the longer perspective and this is not a shorter term thing, so this can lead to message value generation and wealth creation if the investor is investing for the long-term because this is highly volatile in the short run and since this is unregulated currency by the third party and it is a highly protected thing also, so there is a low-risk in the long run against any kind of data breach

B. cryptocurrencies will be decreasing their risk of investment portfolio because it would be leading to diversification of the assets class and this will be providing them with an additional asset class which can diversify their risk of existing portfolio so even though it is volatile in nature, it can provide them with diversification and lower risk.