- Jake Ryan is the investment director for the crypto asset hedge fund Tradecraft Capital.
- Ryan believes that bitcoin will have a market capitalization of $ 5 trillion in 2023 and $ 20 trillion in 2030.
- He also shares two emerging areas of the crypto asset market in which he is optimistic.
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Having spent the first 20 years of his career in software development, Jake Ryan had no difficulty understanding the world of cryptocurrency and blockchain technology.
Still, it took him more than seven years since the creation of bitcoin in January 2009 to make his first direct purchase of the digital currency for about $ 480 each in 2016.
What convinced him to finally make the leap was not the utopian view of bitcoin shared by many fervent fans in the world of technology, but the antifragile nature of digital currency.
There have been many times that bitcoin could have died, said Ryan, pointing to the spectacular end of the Tokyo-based crypto exchange. Gox in 2014 as an example. Formerly the largest exchange in the world, Monte. Gox was targeted by hackers and lost hundreds of bitcoins worth millions of dollars at the time.
Unsurprisingly, the price of bitcoin plummeted with the incident, which resulted in MT. Gox is filing for bankruptcy.
The closure of the Silk Road black market in 2013 and 2014 was another time when bitcoin was on the verge of extinction. All transactions on the online platform, which sold illegal drugs, were carried out with bitcoin to ensure the anonymity of buyers and sellers.
In November last year, the United States government seized more than $ 1 billion in bitcoin linked to Silk Road, but the digital currency’s involvement in illegal activities did not interfere with its relentless rise to $ 20,000 in December.
“It was the fourth or fifth time that I thought, wow, this is going to survive,” said Ryan. “Its decentralized architecture is what allows it. And for me, that’s when it became really investable.”
Bitcoin’s market capitalization could reach $ 5 trillion in 2023
Ryan, who works as a consultant to at least five start-ups supported by venture capital, was a
Angelic investor
since May 2014.
As he delved into blockchain technologies and started investing in crypto startups, he began to consider the idea of combining his passions and skills to form a crypto asset hedge fund.
In 2018, he founded Tradecraft Capital, which focuses on investing in coins and liquid tokens, including bitcoin and ethereum.
Of all the cryptographic assets that Ryan invests in, he considers bitcoin the most exclusive and has what he describes as “an immaculate conception”.
“We have a nickname for Satoshi Nakamoto, but we really don’t know who started it. He came into existence,” he said. “Anyone who knew about this in a free market approach could have extracted Bitcoin and obtained it. It didn’t have a price for a long time. In the end, the market defined price discovery.”
Bitcoin is rare not only because of its limited supply of 21 million, but also because it is supported by a set of incentives that encourage holders to ensure their survival, he said.
Over time, as the monetary value of bitcoin increases with the growing acceptance of corporations and institutional investors, Ryan believes that digital currency will reach a network value or market capitalization of $ 5 trillion in 2023 and $ 20 trillion in 2030 .
Two emerging areas of the crypto-asset market
Despite its great volatility, bitcoin was still hovering above $ 47,000 at midday on Friday. For investors who want to capitalize on emerging but more risky opportunities in the crypto-asset scenario, Ryan shares two topics on which he is optimistic.
One is built around smart contract platforms and stand-alone protocols.
“Anything that involves allowing people to create smart contracts and deploy them, and people out there building autonomous protocols,” he said, “that’s where the value will be accumulated in the future.”
This theme includes sub-areas such as decentralized finance, which refer to financial activities such as trading, loans and interest accounts that occur outside the traditional financial system.
With the recent wave of non-fungible tokens, which are part of DeFi, the decentralized financial space has collected an impressive amount of interest.
Billionaire Mark Cuban told the Defiant Podcast in a recent interview that DeFi reminds him of the early days of the Internet in the mid-90s. The Nasdaq-listed Decentralized Funding Index, which tracks DeFi-focused blockchain tokens, has fired more than 547 % last year.
The other theme that drives Ryan’s portfolio is governance and who has the rights to govern, manage and update blockchains.
An example under the theme are governance tokens, which are tokens created by developers that allow token holders to help decide on protocols, products or new features.
“You can think of governance tokens almost like a new version of equity. Equity is the right to cash flow after expenses are paid,” he said. “Governance tokens are similar and completely different, but they can have qualities that allow you to add value for reasons similar to those of equity adding value.”