Bitcoin adoption is accelerating at an unprecedented pace. Bitcoin is the world’s first investment megatrend in which retail investors have led institutional allocators. And, until the advent of the Great Recession of the Crown, this dynamic did not receive much consideration by investment banks, hedge funds and asset management titans.
The rapidity and magnitude of the jump in stocks and risky assets in March last year was caused in large part by the new strength that retail investors represent in the markets, enabled by new access to information and markets through online platforms across the world. The recent coordinated targeting of concentrated short-term actions by the “Reddit Revolutionaries” was reminiscent of the Arab Spring, where the use of social media catalyzed regime change.
The r / wallstreetbets group was equally well informed and demonstrated its ability to move markets, causing political upheaval and a temporary concern about the US stock market’s clearing and settlement structure. Retail investors have now permanently affected the asymmetry of short bets on single equity stocks that require traditional “market neutral” hedge funds and asset managers to implement more sophisticated risk management strategies and mechanisms.
Why we are living in the Bitcoin era
Bitcoin exploded due to the confluence of several factors. It is “better to be gold than gold” in that it is instantly accessible (requires no trust in an intermediary, administrator or appointment in the vault), has a lower transport cost than gold and has an absolutely restricted supply of 21 million (considering that advances in refining technology and environmental, social and governance shortcuts can generate more metal).
The rate of change in the expansion of the balance sheet of the European Central Bank (ECB), the Federal Reserve and other G4 central banks is unprecedented. The “devaluation of fiat money” has ceased to be a “crypto-child” language to become the language of capital markets, adopted by the world’s leading strategists to encompass the decline in the purchasing power of money and fuel price inflation. of assets across the “Everything Rally” This spectrum of erosion of wealth has been a familiar dynamic in many emerging markets, of course, since World War II, where investors and savers have been living with the threat of their wealth disappearing. conditions have now reached markets developed since the Great Recession of the Crown, where policymakers can take advantage of tools already developed and tested since the Great Financial Crisis – and without having to debate the political moral risk of being seen saving the banks.
ITI is a leading emerging multi-asset broker focused on markets. ITI was optimistic about bitcoin in the second quarter of last year, when it became clear in our main markets that the impact of retail investors on the stock markets was a global phenomenon, rather than limited to the US stock market, as widely spread. The ITI noted that, increasingly, the global population was turning to investing in desperate markets to make a living, rather than the “work at home game culture” that is often portrayed as a bitcoin provider.
Then, in the third quarter of last year, bitcoin started to take the previous peak of December 2017 in the currencies of Brazil, Russia, India, China and South Africa (BRICS) and other emerging markets. While observers from the United States and Europe debated the “go, won’t” break $ 20,000, ITI noted that for hundreds of millions of people around the world, bitcoin had already hit a new high in its currencies around the world. as they ran to protect their savings.
Another major contributor to the establishment’s adoption of bitcoin was the personal incentive for asset managers, investment governance committees and corporate CFOs. Compensation drives behavior in the financial markets. In December 2017, he assumed stoic fiduciary responsibility to condemn cryptography as the vector of money laundering and nefarious activities. This time, however, that pendulum has swung to the other side, where professional allocators and wealth managers need to be able to point to the safest way to access bitcoin for multi-asset stocks and investment mandates.
ITI watches that bitcoin It is an extension of the phenomenon of investment in emerging markets. It is also a manifestation of the value of the Internet. And therefore, it stands to reason that social media and celebrity worship have also driven demand to an extent often misunderstood by traditional asset managers. In recent years, the celebrity has been king, epitomized by the ancestry of the former president of the United States.
Bitcoin has become a necessary topic for all tech-savvy business leaders who have taken advantage of the network effect to propagate their followers. Tesla of Elon Musk announced that he spent $ 1.5 billion on bitcoin in January, causing the currency’s value to rise 17%. The news came just days after Musk added ‘#bitcoin’ to his Twitter profile page – only to replace it with “Dogecoin” shortly afterwards, which increased the volatility for several days. Tesla also recognized future plans to accept bitcoin as payment for its products, which, in a very significant way, contributed to Bitcoin’s acceptance in the market.
The dynamics of “celebrity”
Michael Saylor, the CEO of MicroStrategy, is the most influential American in Bitcoin. His company, a two-decade veteran at Nasdaq, currently holds the largest corporate bitcoin allocation in the world.
The reason Musk and Saylor had such a huge impact on Bitcoin is because of their credentials to back up their fundamentals and bold positioning. Musk is one of the richest people in the world, which makes him a leading authority on successful ventures. Not only did its actions increase the number of retail investors looking to make short-term fortune with the volatile digital currency, but it made bitcoin a much more attractive option for corporate, institutional and traditional investors, which less than six months ago would have came close to bitcoin.
The difference between Musk’s ironic support for dogecoin and his support for bitcoin is that Tesla placed its cash reserves in bitcoin. And in doing so, Tesla has joined a long list of tech giants who have already adopted cryptocurrency: Mastercard, Home Depot, Wikipedia and AT&T accept cryptocurrency as a form of payment and arguably the most recognized technology brand in the world , Microsoft, has been accepting bitcoin for use in its Xbox online store since 2014 (with a short break).
Thus, Tesla’s acceptance of bitcoin gave more weight to bitcoin’s long-term success than any public Musk tweet could. At the time of this writing, rumors about Apple’s introduction to the cryptocurrency market were gaining momentum.
With the economic crisis and the devaluation of fiat currencies caused by the quantitative easing of central banks in response to the COVID-19 pandemic, it is no surprise that retail and corporate investors are rushing to invest in bitcoin. The celebrities’ assessment of this fact, for the most part, did little more than attract even more attention to the digital currency.
This is a guest post by Stephen Kelso. The views expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.