Did Bitcoin ever go away?
Trading around $5,800 as I write this, the buzz surrounding digital assets has undoubtedly picked up in recent weeks as the cryptocurrency has come well off its 52-week low around $3,300, a level it hit in late December.
It certainly helps the conversation when institutional investors jump into the fray, legitimizing it and keeping the momentum for digital assets on the high burner.
Fidelity Gets in the Game
Privately-owned Fidelity is building a new division that focuses on digital assets. Earlier in 2019, it started a custody service for institutional investors to hold Bitcoin. The division has been five years in the making.
Recently, Fidelity surveyed 441 institutional investors and their interest in digital assets. The results have certainly fanned the flames for the entire cryptocurrency industry.
For example, 47% of those surveyed said digital assets were a worthwhile investment. Many of whom are attracted to cryptocurrencies because of their low correlation to assets such as stocks and bonds.
Interestingly, 57% of these institutional investors prefer to buy Bitcoin and other digital assets directly, while a good deal more wants to own them in a fund.
Fidelity’s CEO, Abigail Johnson, has long been interested in establishing a business to safeguard digital assets. Given the Bitfinex and Quadriga losses that have plagued the nascent industry in the past year, a company that securely protects these assets is going to experience rapid growth as institutional investors jump back on the bandwagon.
The Next Stage of Alternative Investments
Alternative investments such as private equity, infrastructure, venture capital, and the many others that exist today have slowly filtered down from the Ivory Towers of wealth. Average investors can now buy ETFs and mutual funds that invest in these assets.
It used to be that the average investor could invest in stocks, bonds, or cash, maybe a little real estate for some excitement, but that was it.
Now, the little guy can invest in equity crowdfunding deals for as low as $100. The democratization of finance has taken a long time to arrive, but thankfully it’s here, albeit in a somewhat limited form.
Back in October 2017, I said that Bitcoin would hit $10,000. At the time, it was trading just below $5,000. It hit the mark within two months of me suggesting it would.
I’m not trying to brag. Plenty of people had thrown this number out there. I was merely using logic arguing that the continuing democratization of investing was something that wasn’t about to go away. Digital assets such as Bitcoin are only the conduits for this democratization.
“I’m a firm believer that retail investors like you and I should be able to buy any stock, in any amount, anywhere in the world. If I want to buy a stock trading on the Qatar Stock Exchange (there is one), I should be able to do so at any time of day without a lot of fanfare or expense,” I wrote, continuing:
“That’s not the case today and I’m not sure if it ever will be given there are vested interests including governments that want to retain control of the levers of power…Bitcoin removes those shackles, which is why it has the potential to hit $10,000 or more in short order. There isn’t anything in the world of investing that’s nearly as democratic in my opinion.”
The Little Guy Will Get a Piece
As institutional investors continue to pile into digital assets, you can be sure that bright people in the world will come up with easy ways for you and me to get in on the action.
It might not happen today or tomorrow but it will because the democratization of investing isn’t a destination, it’s a journey; one that will never end.
Is Bitcoin back? It never went away.
At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.