The adoption of bitcoins is accelerating at an unprecedented rate. Bitcoin is the world’s first investment megatrend in which retail investors have led institutional distributors. And, until the advent of the Great Crown Recession, this dynamic was not much considered by investment banks, hedge funds, and asset management titans.
The speed and magnitude of the rebound in equities and risk assets in March last year was largely driven by the new strength represented by retail investors in the markets, facilitated by new access to information and markets in through online platforms around the world. The recent coordinated orientation of concentrated values of short interest 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 turmoil and a temporary concern over the structure of the US equity market’s clearing and settlement structure. Retail investors have now permanently affected the asymmetry of short single-equity bets that require traditional “market-neutral” hedge funds and asset managers to implement more sophisticated risk management strategies and mechanisms.
Why we live in the Bitcoin era
Bitcoin has exploded due to the confluence of several factors. It is “better to be gold than gold”, as long as it is instantly accessible (does not require trust in an intermediary, administrator or appointment), has a lower transport cost than ingots and has an absolutely limited supply 21 million (while 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 “degradation of fiat currency” has gone from being a “crypto kid” language to a language of capital markets, adopted by the world’s leading strategists to encompass declining purchasing power of money and fuel asset price inflation during the “All Rally”. ”This specter of wealth erosion has been a family dynamic in many emerging markets, of course, since World War II, where investors and savers have lived with the threat of their wealth disappearing. These conditions have reached markets developed since the Great Recession of the Crown, where policymakers can take advantage of the tools already developed and tested since the Great Financial Crisis, and without having to debate the moral moral danger of being seen to rescue the banks.
ITI is an emerging multi-asset broker focused on the markets. ITI became a bullish pace for Bitcoin in the second quarter of last year, when it became apparent in our major markets that the impact of retail investors on equity markets was a global phenomenon, rather than something limited to the U.S. equity market, it was widely reported. ITI noted that, increasingly, the world’s population was engaged in investing in markets in desperation to make a living, rather than the “culture of home-to-home gaming” that is often portrayed as a feeder of bitcoins.
Then, in the third quarter of last year, Bitcoin began to pull off December 2017 highs in the currencies of Brazil, Russia, India, China and South Africa (BRICS) and other emerging markets. Although European and U.S.-based observers debated the issue of “flight, no” will break $ 20,000, ITI noted that for hundreds of millions of people worldwide, Bitcoin had already reached a new high in their coins as they went to protect their savings.
Another major contributor to the establishment’s adoption of bitcoin has been personal incentives for asset managers, investment governance committees, and corporate CFOs. Compensation drives behavior in financial markets. In December 2017, he demanded stoic fiduciary responsibility to deny cryptography as a vector of money laundering and nefarious activity. This time, however, this pendulum has turned to the other side, in which professional allocators and wealth managers need to be able to point out the safest way to access Bitcoin for income investment mandates. variable and assets.
ITI notes that Bitcoin is an extension of the investment phenomenon of emerging markets. It is also a manifestation of the value of the Internet. It is therefore logical that social media and celebrity worship have also driven demand to a point often misunderstood by traditional asset managers. In recent years, celebrity has been the king, embodied by the ancestry of the former president of the United States.
Bitcoin has become a necessary topic for all those business leaders with technological knowledge who have taken advantage of the network effect to propagate their followers. Elon Musk’s Tesla announced it had spent $ 1.5 billion on bitcoins in January, causing the currency to rise 17% in value. This news came just days after Musk added ‘#bitcoin’ to his Twitter profile page, only to replace it with “Dogecoin” shortly after, which increased volatility for several days. Tesla also acknowledged future plans to accept Bitcoin as payment for its products, which, in a very significant way, has contributed to the main acceptance of Bitcoin.
The dynamic “Celebrity”
Michael Saylor, the CEO of MicroStrategy, is the most influential American in Bitcoin. His company, a two-decade veteran of the Nasdaq, currently has the largest corporate allocation in the world for bitcoin.
The reason Musk and Saylor have had such a big impact on Bitcoin is because of their credentials to support their rational and bold positioning. Musk is one of the richest people in the world, making him one of the leading authorities in successful endeavors. Its actions have not only increased the number of retail investors who want to make short-term fortunes in the volatile digital currency, but it has made bitcoin a much more attractive option for corporate, institutional and traditional investors, which makes less than six months has not gone near bitcoin.
The difference between Musk’s dogecoin support and his support for bitcoin is that Tesla put its treasury reserves in bitcoin. And in doing so, Tesla has joined a long list of technology giants that have already adopted cryptocurrency: Mastercard, Home Depot, Wikipedia and AT&T accept cryptocurrency as a form of payment and certainly the technology brand. The world’s most recognized company, Microsoft, has been accepting bitcoin for use in its online Xbox store since 2014 (with a short break).
Therefore, Tesla’s acceptance of bitcoin gave more weight to bitcoin’s long-term success than any public tweet from Musk. At the time of writing, rumors about Apple’s introduction into the cryptocurrency space are gaining momentum.
With the economic struggle 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 appreciation of this fact by celebrities has, for the most part, done little more than draw attention to the digital currency.
This is a guest post by Stephen Kelso. The views expressed are wholly their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.