Bitcoin’s potential, as well as its resilience and performance during difficult times, has been catching the attention of previous naysayers.
In a significant reversal of opinion, Jamie Dimon, J.P. Morgan’s CEO, is now praising Bitcoin (BTC), noting its “longevity as an asset class.” It’s another example of an institution admitting that BTC has withstood the test of time and that it has beat every naysayer as it outperforms all other asset classes.
Dimon’s reversal from the days when he threatened employees with termination if they dared trade BTC, is comforting news for money managers who have been sitting on the fence. With well-known and respected investment managers like Paul Tudor Jones invested in BTC, Wall Street fund managers have a green light to get involved.
In fact, 2020 marks the year when Wall Street money managers started getting increased pressure by customers to invest in BTC. This is a significant change from the previous ten years.
A survey of institutional investors conducted by Fidelity Digital Assets in early 2020 included the following findings:
- 36% of institutional investors surveyed currently invest in digital assets
- Almost 60% of all investors surveyed have a neutral or positive perception toward digital assets
- Almost 80% of investors find something appealing about digital assets
- More than six out of 10 investors feel digital assets have a place in portfolios
- 91% of participants stated they expect to have at least a 0.5% crypto allocation in their portfolio within the next few years
The report paints a very positive picture for the future of crypto assets as institutional interest continues to grow. Like it or not, Wall Street is coming.
Up until 2020, almost all buying pressure came from retail investors. The addition of institutions will add significantly more buying pressure and naturally drive prices higher.
This added interest is supporting investments in additional infrastructure improvements in many operations. Also, government regulations are providing a safer and more secure environment for institutional investors.
Bitcoin in your IRA
Since the IRS has declared cryptocurrencies as taxable assets, people will soon be able to add them into their retirement accounts as well.
Interest in crypto is also on the rise because of what global central banks are doing. They have changed their money-printing operations into hyperdrive, thereby devaluing their fiat currencies in the process.
Yields on government bonds and savings accounts are in record-low territory. The crypto market adds a completely new asset for yield-seeking investors and a hedge against the loss of value of cash holdings.
The 10-year Treasury’s yield dropped sharply below 1% in early 2020. That’s below the inflation rate, which means investors lose money by owning government bonds. This is one reason why professional money managers are looking for a higher yield alternative.
Cryptocurrencies are in a unique position since they’re not tied to the economy and are an alternative to fiat currencies. There is also a limited supply. No other asset class has the same upside potential.
Real assets, like productive real estate, gold, maybe some art, could do well during times of economic hardship, but probably not nearly as well as cryptocurrencies.
Wall Street is only in the beginning stages of recognizing BTC’s resilience and outperformance. Leaders such as Jamie Dimon are now positioning their companies to take advantage of the coming major financial shift, even if it’s simply to have an alternative to the dollar.
And Wall Street isn’t alone in seeing BTC as a better value than cash. Many corporations are moving some of their cash to BTC.
The crypto train has left the station and is building speed and momentum. It’s not yet too late (but it will be soon) to jump on this train for the opportunity to join those who realize that BTC is a great investment and currency as we head into the third decade of the 21st century.
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