In recent years, Bitcoin has risen from being considered “interesting technology” to a formidable investment vehicle that demands the attention of finance professionals. Its stellar performance over the last 5, 10, and 15 years, outshining traditional assets, positions Bitcoin as a crucial element for portfolio enhancement.
Bitcoin has outperformed Gold (by 25x), S&P 500 (by 10x), and the Magnificent 7 (by 3x) in the last 9 years – @JamesLavish
Distinctive Classification: The saying “Bitcoin not Crypto” is relevant to institutional investors as bitcoin’s classification by the U.S. Securities and Exchange Commission (SEC) sets it apart from all other cryptocurrencies. Deemed not a security, Bitcoin enjoys a unique regulatory standing, providing investors with a layer of security and transparency that other cryptocurrencies lack.
Today, there are thousands of copycat cryptocurrencies, many could be likened to penny stocks, with a marketing team promoting them as the ‘next bitcoin’ in order to ‘pump and dump’ the tokens onto the market. It is trivial for someone to start a cryptocurrency of little substance and pay social media influencers promote it.
While it’s true that a few are experimenting with innovative technologies that bitcoin may, one day, absorb into its code, but the vast majority are of little substance, and can be dismissed as scams and get-rich-quick-schemes. It is for this reason that those who know and understand bitcoin have such animosity towards all other cryptocurrencies and people who promote them.
With the high rate of scams in the crypto industry, it is only bitcoin that has proven itself, and has been the most widely accepted by lawmakers, government organizations, institutions, and end users world wide.
Diminishing Volatility: While Bitcoin is often associated with volatility, bitcoin’s trajectory reveals a compelling narrative. A closer look reveals that over time, the volatility associated with Bitcoin is diminishing, and the overall trend is upward. This reduction in volatility is an encouraging sign for investors seeking stability in their portfolios.
Maturation, institutional interest, and growing adoption contribute to the stabilization of Bitcoin’s price movements, making it an attractive proposition for those seeking stability in their portfolios.
ETF Influx and Market Cap Milestone: Bitcoin’s market capitalization surpassing $1 trillion underscores its legitimacy and growing acceptance. Notably, Bitcoin exchange-traded funds (ETFs) are witnessing an average daily influx of approximately $250 million, (since the ETFs launch on 11 Jan 2024 until 1 March 2024), offering regulated and monitored avenues for traditional investors to gain exposure to the cryptocurrency.
The bitcoin EFTs trading volume in little over a month has already surpassed the Bloomberg analysts predicted estimations for the annual inflows to bitcoin ETFs for the entire year.
Sitting among the top 20 traded ETFs in the world, the flood of capital into bitcoin ETFs could mean they are possibly the most successful in history, with bitcoin ETFs outperforming ALL other ETFs of 2023, and are currently almost 50% the size of Gold EFTs in just one month of trading.
Bitcoin ETFs are almost at 50% the size of Gold ETFs. Bitcoin ETFs launched last month. Gold ETFs launched in 2004.
Direct Engagement for Individuals: The bitcoin ecosystem is developing fast in South Africa and it is easy for regular individuals to get exposure to bitcoin. Bitcoin exchanges provide user-friendly platforms to buy bitcoin in South Africa where it is harder as a South African citizen to get financial exposure to the bitcoin ETFs than it is to just buy bitcoin directly.
Furthermore, individuals and businesses can easily accept bitcoin directly as payment for products or services, fostering a more inclusive approach to cryptocurrency ownership. By accepting bitcoin as payment, businesses create an additional avenue for customers to acquire the cryptocurrency through regular transactions.
This aligns with Bitcoin’s original vision as a peer-to-peer electronic cash system, promoting its use in everyday economic activities. With more businesses accepting bitcoin (How to spend bitcoin at Pick n Pay, How to buy a car with bitcoin), it becomes easier for people to spend the bitcoin they have earned.
Missed Opportunity for Finance Professionals: Dismissing Bitcoin as merely “interesting technology” is a blunder in the current financial climate. Beyond its technological underpinnings, Bitcoin represents a transformative financial instrument with massive upside potential.
Bitcoin’s underlying technology, blockchain, has already demonstrated its transformative potential across various industries, showcasing its capability for secure and transparent transactions. However, viewing Bitcoin solely through the lens of technology overlooks its role as a decentralized and censorship-resistant store of value.
As governments and central banks grapple with economic challenges, Bitcoin emerges as a hedge against inflation and a safeguard against centralized control, offering a unique value proposition that extends beyond mere technological curiosity.
Finance professionals need to recognize the role of bitcoin as a decentralized store of value and a hedge against economic uncertainties, providing an unparalleled opportunity for portfolio diversification.
The global adoption and institutional acceptance of Bitcoin further highlight its legitimacy as an investment vehicle. Prominent companies, hedge funds, and institutional investors are increasingly allocating significant resources to Bitcoin, recognizing its potential to act as a store of value uncorrelated with traditional markets.
Ignoring this trend could lead to missed opportunities for financial professionals to position themselves and their clients strategically in a changing economic landscape.
Ones confidence in bitcoin is directly proportional to the amount of research conducted. – @allene418
Strategic Imperative for Learning: Understanding Bitcoin is not just about acknowledging its technology; it is recognizing its profound impact on the financial industry and its potential as a transformative investment vehicle. Institutions globally are integrating Bitcoin into their portfolios, and the institutional acceptance of this digital asset is on the rise.
Finance professionals who overlook this trend risk missing out on a strategic opportunity for their clients and themselves in navigating the evolving financial landscape.
The journey with Bitcoin goes beyond its technological fascination; it’s about embracing a transformative force in finance. Ignoring Bitcoin could mean missing out on a vital piece of the financial puzzle, with implications for portfolio performance and risk management.
As the financial landscape continues to evolve, learning about and engaging with Bitcoin is not just beneficial; it’s a strategic imperative for anyone involved in the finance industry.
