Over the past year, several companies, including VanEck, have proposed a Bitcoin ETF to the SEC. VanEck created the first ever international equity fund in 1955 and is now pushing to publish the first Bitcoin ETF. Bitcoin was created in 2009 after the financial crisis and is a type of digital currency in which a record of transactions is maintained and new units of currency are generated by the computational solution of mathematical problems, and which operates independently of a central bank.
Bitcoin is the best performing asset class in the last 10 years, and many well-established institutions are entering this market space behind the scenes. They are waiting for the ETF approval, proper regulation from the SEC and CFTC and proper custodianship, however, when this pans out, will institutional and retail investors flee to this market?
Let's face it, the US economy is due for a correction within the next two years or so. When this recession occurs, will we see people place their money elsewhere? Traditionally, when the stock market has a correction, people tend to deploy their capital into other asset classes, such as gold or real estate. However, Bitcoin has little to no correlation to the traditional equities market, 0.1 to be exact.
Throughout 2018, Bitcoin and the crypto market has been in a bear market. In the past, Bitcoin has had four, ~80% pullbacks, from reaching all-time highs, and still continues to get back to the all-time high level. People often say Bitcoin is dead, however, in my opinion, it is not. It is only starting to rally. It has been around for 10 years, and it has reached the $20,000 per Bitcoin level, just with retail money. Imagine when institutional money, endowment fund money, sovereign wealth funds, and pensions funds deploy capital into the market. My hypothesis is that Bitcoin will reach $140,000 per Bitcoin by 2023, and if you'd like to see the model that I built to back my hypothesis, I'd be happy to share.
Please let me know your thoughts and opinions on the Bitcoin ETF approval, and how this may impact the US and global economy.
https://www.coindesk.com/cboe-re-files-vaneck-solidx-bitcoin-etf-proposal
4 comments:
Connor, when recessions occur people tend to fly to safety. What makes you believe that people will be willing to throw their money back into the bitcoin market when it has been super volatile since its inception? Also, what do you have to say about analysts in 2018 predicting a huge recovery in the bitcoin price and consistently being wrong. As you said, 4 80% pullbacks, how do you remain so optimistic?
Connor, the crypto markets crashed over a year ago and have shown now signs of recovery. In fact bitcoin has been slowly declining since the big crash. Crypto was overhyped in 2017 and people were invest in it solely because the price was being driven up the small minority of people who own a majority of bitcoin. I think it will see further decline in a recession as more people realize it is not the currency of the future. I do believe that block chain will be implemented all through out the financial system in the coming years. The most likely way it will become the foundation of our currency is the government will convert all the money to electric money that will be based on block chain.
Jake:
I find myself more optimistic each day as I fall further down the "bitcoin rabbit hole". The distributed ledger technology that the blockchain has to offer is revolutionary. This tech allows for a more secure and streamline of transactions efficiently without requiring intermediaries to manage the process. Blockchain technology is revolutionary in terms of record keeping and can track and document every change in a record or transaction. It will disrupt every single industry. From contract managers and smart contracts, payment processes and currency, supply chain management, asset protection to the identification and personal record systems and records. People often forget that Bitcoin was the first ever "blockchain".
If you take price and market cap out of the spectrum, you see thousands of people fleeing the best companies in the world to work on crypto projects. From Twitter, linkedIn, Facebook, YouTube, Google, Bank of America, JPMorgan, Goldman Sachs - you name it. This market is here to stay. The top investment banks have been working behind the scenes for the last two years on building trading desks to trade this asset class and building custody solutions. Fidelity will be launching an arm under them known as Fidelity Digital Assets, and they will offer crypto custody. Fidelity has over $2 Trillion in AUM.
I am extremely bullish on the future of crypto and digital assets.
Jack:
Please read my previous response to Jake.
With your comment doubting it be the "currency of the future", I don't necessarily agree or disagree with you. I think Bitcoin is used as a safe haven for many third world countries. If you look at Venezuela, they are experiencing hyperinflation (~500%). They have no trust in their government or financial system. Countries like these are quickly adopting digital currencies. Government treasury bills are based on the faith of the people and the government, whereas Bitcoin is based on math and computation. If I were to liquidate my entire portfolio and all my assets and convert that to Bitcoin, I could travel anywhere in the world and no higher authority can seize my net worth.
Bitcoin offers every quality that traditional money offers: Store of Value, Medium of Exchange and Unit of Account.
While reading yesterday, I came across an interesting fact. From 2010 to 2018, if you were to have 99% in cash allocations and 1% in bitcoin, you would have outperformed the S&P 500, even with the 4 crashes that Bitcoin has had, falling over 80%.
I think we are extremely early in the crypto space, and I honestly think this is only the beginning. I don't disagree with you of crypto being overhyped in 2017 - it was. People were launching ICOs left and right, and that overvalued Ethereum immensely. However, we are on the path to 10s to 100s Trillions of dollars in this market space.
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