Unsurprisingly, the March stock market sell-off triggered a mass exodus from equities to alternative assets such as gold and Bitcoin. As market sentiment rapidly deteriorated, investors became spooked by volatile share prices and economic uncertainty. Nevertheless, I think investing in the best UK shares available on the market today still remains a superior way of building capital.
The problem with Bitcoin
The price of Bitcoin surged in the wake of the market crash. In fact, the virtual currency has vastly outperformed many stock market indexes around the world. What’s more, this could feasibly continue in the short term. Global equities look set to continue to grapple with the implications of the wider macroeconomic uncertainty.
However, let’s not forget that the price of Bitcoin plunged in tandem with UK shares in early March. From mid-February to mid-March, the cryptocurrency shed around 50% of its value. What’s more, wild downswings like this are not a rare occurrence for Bitcoin investors. Simply observing the virtual currency’s price chart tells you everything you need to know.
On top of this, I’m not convinced that Bitcoin’s future prospects are the brightest. After 11 years in circulation, the cryptocurrency is still not widely used or accepted. It seems that for now and the foreseeable future, its valuation must continue to be derived from sheer investor speculation.
Don’t get me wrong, I’m not ruling out a small allocation to Bitcoin in a diversified investment portfolio. Rather, I believe that buying a handful of the best UK shares is a superior way to build wealth. Especially over the long term.
A better alternative: Buying the best UK shares
The buy-and-hold investment strategy is a tried and tested way of building capital. Just look at the success of investing titans such as Warren Buffett, who have utilised this approach throughout their time in the market.