Bitcoin has entered a new era, said Danny Masters, former J.P. Morgan Commodity trader and current chairman of CoinShares in a recent interview with CNBC’s ‘Power Lunch.’
According to Masters, this has been largely due to the global pandemic which increased the need for inflation-resistant investments. Bitcoin is further driven by digitization because it is a digital store of value and people are looking for that, he said.
Additionally, it is driven by the fact that people are now accepting its volatility which is not only declining but the volatility of other asset classes has proved to be a lot more than people expected, added Masters.
He also pointed to CoinShares’ research which talks about four percent allocation to bitcoin in a traditional balanced portfolio having performance and diversification benefits. Masters said,
“There is definitely a narrative at the moment that this so-called this sort of perceived career risk of having bitcoin in your institutional portfolio as a portfolio manager is fast migrating into a career risk for not having bitcoin in your portfolio and that’s a really stunning development.”
Talking about the overall current environment, Masters said that the “sentiment is electric” in the market.
For this, he mentions the world’s largest asset manager BlackRock’s CEO, Larry Fink who recently pointed out the enormous interest that they have been sensing over its social channels and websites.
Fink in his conversation with former Bank of England Governor, Mark Carney shared that the hits on the BlackRock website were 3k on COVID, 3k on monetary policy, and 600k on Bitcoin.
Bitcoin has caught the attention and imagination of many people and they are “fascinated” and “excited” about it, said Fink. Although it is still untested and pretty small relative to other markets, it can possibly evolve into a global market, he added.
We look at it as something that is real but it is still untested and it has to go through many markets to see if it is real, said the CEO of the asset manager which has about $7 trillion in AUM.
He further went on to say that having a digital currency has a real impact on the digital dollar as they make the need for the US dollar less relevant. Digital currency also brings down costs quite considerably according to Fink but he added that it needs to be organized and governed and be a component of government policy worldwide.
“That’s the demand-pull effect,” said Masters referring to Fink’s change of tune, adding that companies like Square, MicroStrategy, and PayPal are outperforming the market because they are going public with their exposure to Bitcoin.