The following article originally appeared on Bloomberg.com.
Bloomberg:Virtual currencies are among the hot topics in global financial markets and, as a result, investors have been buying and selling virtual currencies like bitcoin, ethereum and litecoin to gain an edge in the volatile market.
Some analysts believe virtual currencies could be a more sustainable investment option than stocks, as they offer higher returns compared to equities and are far less volatile.
Virtual currencies like ethereum, bitcoin and ltc are trading at higher prices than equities, but the currencies are also more volatile.
Investors have been flocking to virtual currencies as they enjoy higher volatility and higher returns than stocks.
A virtual currency ETF would allow investors to diversify their portfolios and potentially save on taxes, according to research firm eMarketer.
Virtual currency trading has grown rapidly in recent months as more investors started buying virtual currencies to gain exposure to the technology.
In March, virtual currency trading reached a record high of $14.8 billion in the U.S., according to data provider CryptoCompare.
Virtual funds have risen to $13.3 billion from $8.8 million in June 2016.
As of April, about $17 billion had been raised by virtual currency funds and the average size of a virtual currency fund was $12.2 million, according Toly Tech Research.
It’s unclear how many investors are investing in virtual currencies.
The average price of a bitcoin on the CBOE Volatility Index was $9,971.40 at the end of May, up more than 3,000 percent from May, according data provider CoinDesk.
As for litecoins, trading on ethereum is relatively stable at $2,764.35 at the time of writing.
There are about 1.3 million bitcoins and about 5,000,000 ether, both virtual currencies traded on eToro, an exchange where the currency is traded on a regulated exchange, according the CBOe.
Virtual currencies, which have been around since 2010, have gained popularity in China, where some bitcoin users have begun buying them as a hedge against falling yuan and yuan-denominated currencies, including bitcoin and ether.
The yuan’s fall over the past year has caused fears that virtual currencies would be less resilient to economic and geopolitical shocks.
As bitcoin has lost popularity in the West, many investors have begun looking for alternative assets to hedge against the collapse of the yuan.
Many virtual currency investors are looking for opportunities to diversified portfolios, with some investing in the likes of bitcoin, ether, lite coins and ether futures.