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The Big Money Is Still On The Crypto Sidelines

OK, so I’ve been harping on for a while now about why I think you should own a little bit of bitcoin.

Maybe you’re getting a little fed up? I appreciate that.

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We looked at incorporating crypto coverage into our research back in 2016. Despite sensing the incredible opportunity, I figured our subscribers wouldn’t be interested. It would be too hard, and the hurdles too high to overcome.

But after we merged our business with our publisher Kim Iskyan’s Truewealth Publishing in March of this year, he saw my enthusiasm and encouraged me to share that with you.

The truth is, I underestimated our readership. That’s a mistake I won’t make again. Our bitcoin-focused issues of the Asia Wealth Investment Daily are the most widely read.

When Kim finally nudged me around to start sharing my bullishness, bitcoin was at a little over US$1,000. Today, we’re pushing on US$6,500.

I know I’ve pounded the table… hard… along the way. But it’s only because I truly believe everyone should have a little exposure to this asset class.

You see, what I’ve learned along the way is that the most vocal opponents of crypto assets – the bitcoin bears, the ones who think it’s all a big giant tulip-scented joke – are typically the people who know the least about the space.

As the author Ginn Hale puts it… “To fear what you do not understand is to mistake ignorance for safety.”

Hand on heart: I’ve yet to come across anyone who’s truly done an independent, well-researched deep dive into the crypto asset ecosystem and come away saying you that you shouldn’t own any crypto at all, that’s it’s all a big dud.

I made this point recently, talking about JPMorgan CEO Jamie Dimon and BlackRock titan Larry Fink.

(And to reiterate, for the umpteen-thousandth time – I have never, and will never, recommend that folks put more into crypto than they can afford to lose.)

Anyway, with that out the way, I’m going to get back to another reason why you need to consider the crypto space more carefully.

The big money is still on the sidelines

This is one of the most important things to understand – institutional money hasn’t made its way into crypto yet.

Now, if you think that institutional investors are going to watch a liquid, tradeable, investable asset class grow in size year after year after year, and not want to be a part of it, then I’m not sure I’m going to convince you otherwise.

They won’t stay on the bench for much longer. Because existing crypto incumbents are building out everything required for big money to participate.

A pension fund can’t make even the tiniest allocation towards crypto until a LOT of legal boxes are ticked and i’s are dotted. That’s why things like compliance, digital asset custody and cold storage, security and, of course, legal opinion is all being put in place.

This doesn’t happen overnight, but it will happen. A few years ago, crypto was just a community, a tribe. Now it’s an industry, a multi-billion dollar one that EVERY financial institution and government is looking at.

Just this week, the world’s largest exchange owner, CME Group Inc., announced it will be introducing bitcoin futures trading by the end of the year.

What’s more, the CME Group CEO Terrence Duffy cited pent-up client demand as a key driver for introducing the contract.

 

(This begs the question as to whether or not Jamie Dimon will stay true to his word. Back in September, he said that if a JPMorgan trader began trading in bitcoin, “I’d fire them in a second. For two reasons: It’s against our rules, and they’re stupid. And both are dangerous.”)

It’s about the people

An additional element driving institutional adoption is the number of highly credible ex-finance industry people who are crossing over to crypto. A good example is Blythe Masters, one of the most experienced and successful bankers in recent years. She runs a company called Digital Assets focused on financial blockchain technology* and backed by the biggest names in finance.

*There are those who say that blockchain and crypto assets are two different things. They are, but they are both two sides of the same coin, like public companies and private companies.

People like Ms. Masters, and my friend Lewis Fellas (former Harvard Endowment trader who recently successfully launched his own crypto hedge fund), and others, keep migrating – which brings a huge amount of credibility to the space. And these people serve as a powerful bridge to help the more traditional money cross over into crypto.

Even if you’re a sceptic…

Listen, even if you think I’m completely wrong and disagree with me, please just keep reading about crypto before you shut the door on it.

And if you understand the real mechanics of how bitcoin works, what a smart contract is and what a decentralised autonomous corporation is and how it works, and you still think there’s nothing there, then at least you’ll be well informed.

Until then, keep an open mind. The crypto ecosystem is a rabbit hole…

“When logic and proportion
Have fallen sloppy dead
And the White Knight is talking backwards
And the Red Queen’s off with her head
Remember what the Dormouse said
Feed your head
Feed your head”

– Grace Slick, White Rabbit

Good investing,
Tama

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