- The ‘Big Bang’ of 2018 dwarfed by other asset bubbles
- Bitcoin outperformed every other asset class
- Why aren’t investment professionals allocating to BTC
The investment of the decade which recorded 9,000,000% gains is currently sitting at just around $7,100.
In the short term, Bitcoin is expected to experience a lot of pain ahead that would surely be mixed with its own dose of gains as well.
But as we reported, in the long term, a poll run by Mati Greenspan, founder of newsletter Quantum Economics found that a staggering 49.2%, nearly half of respondents believe that Bitcoin is going to climb to $1 million by the end of the next decade.
Where will Bitcoin be in 10 years?
— Mati Greenspan [not trading advice] (@MatiGreenspan) December 29, 2019
The Big Bang of 2018 Dwarfed by other Asset Bubbles
In December 2017, BTC hit its peak at $20,000 while the crypto market cap nearly reached one trillion dollars, $835 billion, during the first week of January following a rapid run up in Ethereum, XRP and other altcoins as well.
This “big bang” was relatively large resulting in a 20x price increase in a year, but Meltem Demirors, Chief Investment Officer of Coin Share and Marty Stenson, Associate, who authored the 2019 Crypto Trends Report “the value created (and destroyed) is dwarfed by other asset bubbles.”
Bitcoin outperformed every other asset class
The world’s leading cryptocurrency is already the best performing asset of the decade with a whopping 9,000,000 percentage gains.
According to the digital asset management company Coin Shares, It took seven to seventeen years for Amazon to recover its all-time highs and Bitcoin is expected to “follow a similar trend.”
However, Comparatively, bitcoin has been a much volatile asset, “but on an absolute basis, it’s outperformed every other asset class over a comparable time scale.”
Why aren’t Investment Professionals Allocating to BTC?
As a recent report by Bank of America Securities stated, if you invested $1 in bitcoin at the beginning of the decade, it would now be worth over $90,000.
On the other hand, Demirors notes that more than half of all stocks underperform the risk-free rate (US Treasuries) and “many lose money.” Actually, less than 1% for stocks drive more than 75% of stock market returns, she added.
This is why “it’s odd to me that investment professionals aren’t allocating to bitcoin or a passive basket of crypto (which is still >70% bitcoin),” said Demirors.
She illustrates how ARK Invest, a fintech company made a small allocation, less than 1% to Grayscale Bitcoin Trust to their Innovation ETF in 2015 that was one of the best performing ETF of 2017.
But she notes, “This strategy requires conviction. Riding the trend on the way up is a risky proposition, given how volatile bitcoin is. Secular trends take time to develop, and cyclical volatility can be a major deterrent.”
But as we saw in the case of the dotcom bubble, a few like Amazon came out at the top as winners. As such, “investment decisions *today* should be shaped by our perspective on where the world is headed *tomorrow.*”
“I believe bitcoin is a massively important part of the future,” added Demirors.