Bitcoin and Cryptocurrencies are Secure Investment Options, Trade Them Confidently
A decade ago, 10,000 Bitcoin could only buy a few pizzas. Today, there are over 5,000 cryptocurrencies in the world according to CoinMarketCap (CMC). The crypto-asset market is booming with long-term investors “HODLing” their assets, while crypto CFD traders make a fortune from price movements.
Finance industry movers and shakers like Paul Tudor Jones — who also doubles up as a Billionaire, are encouraging the use of Bitcoin futures as a hedge against inflation. The macro investor has likened the cryptocurrency’s position in the financial industry to that of gold in the 70s. A slight detour through history shows that before Richard Nixon put an end to the convertibility of the dollar to gold, an ounce of gold was worth a paltry $40.
By 1980, that same ounce was worth $850, a 2,000 percent return. As gold was through the ’90s, the cryptocurrency market has also had its bleak moments. Not once or twice, have bandwagon investors lost their capital after being sucked in at the end of a bull run.
As a developing market, Bitcoin prices have sometimes crashed, shaking out some investors. Because of this, Nouriel Roubini, aka Dr. Doom, named Bitcoin the “mother of all bubbles”. Warren Buffett also pledged not to buy Bitcoin and has previously called it “rat poison”.
In 2017, Jamie Dimon, JPMorgan Chase’s CEO, publicly bashed the digital currency, insisting that it was “worse than tulips”. “It won’t end well”, he said. “Someone will get killed”.
Tables are Turning, Bitcoin has Proven Critics Wrong
Two years after this slur, JPMorgan Chase launched the JPM Coin, its native stable coin, to leverage the benefits of blockchain and enjoy institutional accounts’ instant payments transfers.
The JPMorgan CEO has said that he regrets his negative statement on cryptocurrencies and has pledged support for blockchain innovation in the financial sector saying, “Blockchain is real”.
Blockchain and digital currency’s disruptive nature is a threat to mainstream financial institutions. Nevertheless, most central banks and banking institutions are embracing blockchain because of the technology’s ability to improve antiquated financial processes.
Most of these institutions are in a race to create the future of banking by investing heavily in technology. Today over 414 financial institutions around the world have blockchain developments, viewing it less as an enemy to their control and more as the next step in banking innovation.
Some banks like JPMorgan Chase have upped the ante and have now taken in crypto businesses such as Coinbase and Gemini as their customers. This power move positively positions the two-decade-old bank, prepping it to reap big rewards from the ongoing digital currencies adoption movement.
Warren Buffett, dubbed the Oracle of Omaha, has made major investments in banks, buying significant shares in Bank of America, Wells Fargo, and JPMorgan Chase. It is interesting to note that these banks all have interests in blockchain development. They together with Bank of New York and Goldman Sachs and US Bancorp make up an enormous part of Berkshire’s massive 40 percent financial services portfolio.
Today, Berkshire Hathaway is sitting on piles of cash, as profitable investment channels that profit their investors shrink. Berkshire Hathaway, like the rest of the financial world, has too much-devalued money to spend, yet they generate colossal amounts of cash from acquisitions or capital-intensive enterprises.
With no big top fund manager deals on the horizon, their shareholders are growing restless with David Rolfe, selling off his Berkshire stocks in late 2019. The fund that has thrown in the towel on the massive US airline sector has not made any significant investment since 2016, seeing no other significant buys in the past few bear markets and the 2020 market crash.
Admitting that he made a mistake by going into the airline sector, most crypto enthusiasts believe that Berkshire Hathaway would be telling a different story had they instead invested in Bitcoin.
The Future is Crypto
In the Great Monetary Inflation, Paul Tudor Jones says that investors maximize profits by owning the fastest horse. The CEO and founder of Tudor Investment Corp says that the fastest horse of the season is Bitcoin. His Tudor BVI fund will own Bitcoin futures, becoming the largest holder of the asset ignored by investors such as Berkshire Hathaway.
Paul’s interest in Bitcoin futures has piqued because of the escalating bond-buying and fiscal spending by central banks worldwide in the wake of the COVID-19 pandemic. He for instance says that the global economy has received an extra 6.6 percent of fiat since the beginning of the year. “We are witnessing the Great Monetary Inflation, an unprecedented expansion of every form of money unlike anything the developed world has ever seen,” he says.
Tudor Investment Corp is but one of the many business entities embracing the role of cryptocurrencies in the investment world. The Commodity Futures Trading Commission (CFTC) has not only declared ether (ETH) as a commodity but is also willing to approve ETH futures. The regulatory body in charge of all US derivatives markets has already given a nod to Bitcoin futures.
The race towards the first Bitcoin ETF is on with firms like Wilshire Phoenix and Gemini Trust, braving multiple rejections from regulatory authorities. The ETFs will be a massive boon for the digital currency market, affecting it positively as they have with the gold market. The crypto ETF will signal institutional acceptance setting off a massive bull rally.
Crypto to Receive Massive Investment from the “Great Wealth Transfer”
Even in the absence of a crypto ETF, the digital currency sector has generated a lot of interest amongst institutional investors.
There is a spike in interest amongst hedge funds and financial businesses with a Fidelity Investments survey showing that 47 percent of portfolio holders appreciate the innovative nature of cryptocurrencies.
Currently, Goldman Sachs, Fidelity Investments are all talking crypto alongside JPMorgan Chase.
Financial institutions are not only trading crypto assets but they want to offer their customers cryptocurrency services as well. As an example, over 40 German institutions of this caliber have approached BaFin, the country’s regulator seeking licenses for crypto service operations. Most of them are seeking to perform crypto custody services as the millennials now become the wealthiest generation.
This not forgetting that the millennial generation is about to amass over $68 trillion from the baby boomers who made a lot of wealth in the past successive long economic expansions. The event referred to as the “Great Wealth Transfer” is a huge net positive for Bitcoin given the millennials propensity to invest in emerging technologies like Bitcoin over gold or say stocks. Notably, through to 2030, millennials are set to have a disposable income of over $7 trillion.
This age group has numerous crypto enthusiasts with a high mistrust of banks. 71 percent of them report that they would rather visit a dentist than listen to a banker. The millennial has witnessed the devastation that greedy banks can wreak on an economy and how that greed affects the wealth of their customers.
Consequently, it is only a small 14 percent of millennials that trust Wall Street, and 68 percent of them would rather use a technology-based banking solution than traditional banks. Most millennials have given banks signals that they will not have the smoothest of relationships with them unless they innovate.
Millennials have a deeper trust in blockchain solutions than centralized financial institutions. FINMA, Switzerland’s financial regulator has already approved the crypto custody service and trading desks licenses of two Swiss banks.
Decentralized (open) finance (DeFi) — blockchain 1.0 financial extension, is also bridging the gap between traditional banking and decentralization, threatening the traditional banks’ spot as an intermediary. At the moment, there is over $900 million worth of Ethereum’s native currency, ETH, locked up in DeFi applications.
Where to Trade Crypto CFDs
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