Cryptocurrencies as an Alternative Investment Asset Class

Authors

  • Shaista Majeed MBA, Banking and Finance, Institute of Banking and Finance BZU Multan
  • Muhammad Soban Murad Associate Relationship Manager - Corporate & Investment Banking
  • Ghazanfar Abbas Associate Manager Banking Service, Allied Bank Limited
  • Junaid Iqbal PhD Scholar, Management Sciences, Islamia University of Bahawalpur

Abstract

This paper examines the potential for cryptocurrencies to be considered an alternative investment asset class within the Pakistani investment context. A comprehensive literature review outlines key considerations around cryptocurrencies as investments, including drivers of adoption, risks and returns profile. The study sets out to assess investor perceptions of cryptocurrencies as well as evaluate the risk-return payoff of a hypothetical cryptocurrency portfolio versus traditional assets. Quantitative analysis on simulated data for a Bitcoin, Ethereum and stable coin portfolio finds higher returns but also higher volatility compared to stocks and bonds over a five-year period. The paper concludes that cryptocurrencies exhibit characteristics of an alternative investment worthy of consideration by Pakistani investors seeking diversified portfolios, however also cautions around high price volatility. Further research around regulation and governance of cryptocurrency markets is advised.

Keywords: Cryptocurrency, Alternative Investments, Portfolio Diversification, Volatility, Investor Perceptions

 

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Published

2024-02-04

How to Cite

Shaista Majeed, Muhammad Soban Murad, Ghazanfar Abbas, & Junaid Iqbal. (2024). Cryptocurrencies as an Alternative Investment Asset Class. Journal of Business and Management Research, 3(1), 174–184. Retrieved from https://jbmr.com.pk/index.php/Journal/article/view/107