Bullish on Bitcoin

The growing institutional investor acceptance of Bitcoin as an asset class bodes well for the future.

Bullish on Bitcoin

Since I first wrote about Bitcoin and why it deserves to be considered as part of your portfolio the price is up nearly 50 per cent.

The original purchase price was $AUD 14,168 while the current price is listed as $AUD22,518. That's a pretty impressive performance in less than five months.

There could be any number of reasons to explain the price move but I think it is principally because there are more institutional investors getting into the space.

Some we have written about before. In August, we shared that the company Microstrategy had pumped $250 million of their spare cash into Bitcoin.

Since then, a number of other companies have done the same.

Finance firm Square put $50 of their treasury into Bitcoin in October. It's now worth $75 million!

Even popular funds transfer firm Paypal has enabled crypto on its platform.

Every step by big corporates normalises Bitcoin as an alternative and legitimate asset class.

Not everyone is convinced though.

Nouriel Roubini is a Professor of Economics who has worked int eh White House, for the IMF, the World Bank and the US Federal Reserve. Here's what he put on Twitter.

He's quite correct but you could say that is the same about another favourite store of value - Gold.

Gold is not a currency, it isn't a unit of account nor is it scalable. It has marginal utility outside of being a store of value and its asset status is almost entirely based on its historical role.

I still think Bitcoin has the prospect of becoming the digital version of Gold. Some seriously successful investors seem to agree.

We have seen some of the world's most experienced and successful investors make the case for including Bitcoin as part of your portfolio.

Here's billionaire hedge fund manager Paul Tudor Jones on CNBC.

There is also a simpler way of considering the potential upside of Bitcoin.

Right now in the world there are about five million ultra high net worth individuals. They are the people with $30 million or more in liquid assets.

There are only 21 million Bitcoin available. So if these individuals all want to have even a minimal exposure to Bitcoin (relative to their net worth),  they only get a little over four Bitcoins each. That's less than 100K investment at current prices.

As Bitcoin becomes more acceptable to institutional investors, so too will it be in greater demand from these (and other individuals). Market economics suggests that increased demand for a fixed supply will push prices even higher.

Naturally this is all predicated on investors maintaining confidence in Bitcoin and that it will continue to be in demand as a hedge or store of value.

But as mentioned previously, that is the same with almost every asset - particularly alternative assets. The key is scarcity and demand.

In the end, if you happen to have 5 Bitcoin in your portfolio, there is no way you can ever own less than the top 10 percent of richest people in the world.

Of course you don't need that level of commitment, but one key to growing your wealth is picking an investment trend early and riding it as long as you can.

I use EasyCrypto to purchase my Bitcoin. I've found them very easy to deal with and happy to help the novice (like me!).

Click here to visit the Easycrypto site to find out more.

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