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Bitcoin Reaches “Now Or Never” Moment: Fund Manager on Institutional Adoption

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2020 so far has proven to be Bitcoin’s year. The asset has beaten stocks, gold, and nearly every other asset in year-to-date ROI. With all eyes now on the first-ever cryptocurrency, one British fund manager with billions of pounds of assets under management claims Bitcoin has reached its “now or never moment.”

Hedge Fund Managers Prepare To Dump Gold Holdings For Bitcoin

Cypherpunks, tech enthusiasts, and dark web users were among the earliest to take an interest in Bitcoin and cryptocurrencies. Once the mainstream public caught wind of the financial technology’s disruptive potential – and the wealth it could generate – retail investors piled into the asset at the peak of the bubble.

The next uptrend in the cryptocurrency is expected to be driven by institutional money coming in. While that narrative has now existed for years, dating back far further than Bakkt’s launch in September last year, it has failed to take hold.

Only recently, has institutional interest begun to rear its head, following hedge fund manager Paul Tudor Jones comparing the cryptocurrency to the role gold played in the 70s.

RELATED READING | WHY TOPPLING SILVER AND GOLD PRICES COULD BE ESPECIALLY BAD FOR BITCOIN

At the time, the asset traded at just $35 an ounce. Today it is worth over $2,000 an ounce thanks to decades of mismanaged monetary policy and inflation. Like gold, Bitcoin’s digital scarcity is said to cause it to behave similarly when faced with an economic environment rife with inflation.

With the Federal Reserve printing more money each quarter, institutions are finally looking toward Bitcoin for this reason. And it’s brought the cryptocurrency, according to on hedge fund manager, to the asset’s “now or never moment” with institutions.

Bitcoin
BTCUSD Hedge Fund Manager Five-Fold Target By 2023 | Source: TradingView

How The First Ever Cryptocurrency Overcomes Its Credibility Hump

In an interview with Telegraph Money, a British hedge fund with “tens of billions of assets under management” says that the market is “approaching the now-or-never moment for bitcoin before institutional investors adopt the asset.”

The hedge fund manager is considering adding Bitcoin to its fund, potentially allocating as much as 30% of the fund’s gold holdings into Bitcoin instead. The fund managers expected at least a five-fold increase by 2023 if Bitcoin can overcome its “credibility hump.”

The cryptocurrency market rising alongside precious metals bodes well for the budding financial asset class. It is proving to the world that the safe haven narrative has legs, and the asset’s digital scarcity is demonstrating its value in the current economic climate.

RELATED READING | HOW “PICTURE PERFECT” MACRO UNCERTAINTY WILL KEEP GOLD, BITCOIN TRENDING

Further potential to prompt more of gold’s market cap to melt into crypto lies in the growing security threat across the globe. In Hong Kong, the wealthy are moving their gold offshore. In the United States and the rest of the world, unrest, and protests have led to violence and looting.

Storing assets digitally, instead of physically, could prove to be yet another important reason for gold capital to flow into Bitcoin, further driving the asset’s perfect storm institutional rally – a rally that starts now, or never, according to the types of investor behind the wheel.

Featured image from Deposit Photos.

Source: https://bitcoinist.com/bitcoin-reaches-now-or-never-moment-fund-manager-on-institutional-adoption/?utm_source=rss&utm_medium=rss&utm_campaign=bitcoin-reaches-now-or-never-moment-fund-manager-on-institutional-adoption

Blockchain

EU research unit: a regulated crypto-asset sector could improve the bloc’s economic outlook

A study by the European Parliamentary Research Service claims that the digitalization of assets could benefit the European Union’s overall economy.

The post EU research unit: a regulated crypto-asset sector could improve the bloc’s economic outlook appeared first on The Block.

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EU research unit: a regulated crypto-asset sector could improve the bloc’s economic outlook – The Block














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Bitcoin Could 14x to $3 Trillion Says Ark Invest Analysis

Bitcoin correlation with different asset classes, Ark Invest.Ark Invest, which focuses on investing in disruptive innovation like AI and biotech, thinks bitcoin could more than 10x in the next five years from the current $200 billion market…

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Ark Invest, which focuses on investing in disruptive innovation like AI and biotech, thinks bitcoin could more than 10x in the next five years from the current $200 billion market cap to $3 trillion.

In a comprehensive analysis they suggest bitcoin can capture numerous markets, starting with settlement networks for value exchange. They say:

“In the United States alone, deposits totaling $14.7 trillion generate $1.3 quadrillion in settlement volumes between and among banks each year.

If it were to capture 10% of those settlement volumes at a similar deposit velocity, we believe the Bitcoin network would scale more than 7-fold from roughly $200 billion to $1.5 trillion in value.”

They don’t quite explain why banks would use bitcoin to settle instead of their own Fed systems, but another potential market is asset protection.

“With good public and private key management, we believe bitcoin cannot be seized,” they say. Thus:

“In our view, a sensible allocation to bitcoin would approximate the probability that a corrupt or misguided regime will confiscate assets – whether by fiat money inflation or by outright seizure – during an individual’s lifetime.

If that probability were 5% on average globally, bitcoin’s market capitalization, or network value, could vault more than 10-fold from $200 billion to $2.5 trillion.”

This is further complemented by bitcoin being better than gold in the view of Ark Invest, stating:

“Supporters often refer to bitcoin as digital gold because it improves upon many of physical gold’s characteristics.

Not only is bitcoin scarce and durable, but it also is divisible, verifiable, portable, and transferable, all of which protect from the threat of centralization.

According to our research, if it were to take 10% share of the physical gold market, bitcoin’s network value could increase nearly $1 trillion, 5 times its $200 billion base today.”

This somewhat overlaps with the inflation related potential market, especially in medium to under developed countries:

“While Bitcoin has not evolved enough to service an entire economy, we believe demand for bitcoin in emerging markets should increase as its infrastructure reaches critical mass.

If bitcoin were to capture 5% of the global monetary base outside of the four largest fiat currencies – US dollar, yen, yuan, euro – its market cap could increase by $1 trillion, as shown below, a 6-fold increase from $200 billion today to roughly $1.2 trillion.”

Then we get to the most interesting part of the analysis which is worth reading in full because our highlights can’t do justice to that thorough analysis of bitcoin as a strategic investment.

“Untethered from traditional rules and regulations and, generally uncorrelated to the behavior of other asset classes, bitcoin could serve as a strategic allocation in well-diversified portfolios, despite its volatility.

We believe the low correlations among traditional asset classes and bitcoin should minimize idiosyncratic risks and lower overall volatility, resulting in higher risk-adjusted returns.

To illustrate bitcoin’s low correlation relative to other asset classes, we calculated the 90-day rolling correlation between bitcoin and nine other assets over the 10 years from May 2010 through June 2020, [pictured, featured image]. As suggested by this sample, for the most part bitcoin has been uncorrelated to traditional asset classes and various stocks.”

This quality of bitcoin as an uncorrelated asset class has long been established now with this report also concluding “the correlations for each asset tend to center around zero, indicating little to no correlation.”

But then they look at other factors which an interested institutional investor might consider, like trading volumes. They say:

“Aggregated in different ways, bitcoin’s trading volume ranges from $200 million to $12.4 billion per day.

For a buy-side institution deploying fresh capital, U.S Dollar Markets on major exchanges is perhaps the most relevant. Given $200 million in daily trading, a buy-side institution limited to 10% of the volume could deploy roughly $20 million per day.

Including the major fiat currencies, however, bitcoin’s daily trading volume triples to $600 million, the U.S. dollar accounting for roughly half of the total.

Stablecoins more than triple bitcoin’s daily trading volume once again to $1.9 billion, thanks primarily to Tether. Adding cryptocurrencies to the mix increases trading volume by $700 million.

Finally, accounting for nearly 80% of the total, derivatives expand bitcoin’s daily volume more than five-fold to $12.4 billion, giving institutions limited to 10% of the volume an opportunity to deploy $1.2 billion per day.”

Bitcoin trading volumes are however small compared to an entire asset class like equities which handle about half a trillion a day with bitcoin’s trading volumes being more like that of a stock, higher than Google for example but lower than Facebook.

In addition, “bitcoin often is more liquid than the average publicly traded equity,” they say.

Then they analyze what all this means in their view regarding capital allocation in line with the modern portfolio theory.

“With hindsight, to construct a portfolio with bitcoin while maximizing the Sharpe Ratio or minimizing volatility at the efficient frontier, an investor would allocate between 0.27% and 6.55% to bitcoin,” they say. Looking forward:

“According to three 5-year simulations, each a function of bitcoin’s total addressable market (TAM) opportunities,

  1. 1% of TAM, or $1.1 trillion
  2. 5% of TAM, or $5.5 trillion
  3. 10% of TAM, or $11 trillion

…the suggested bitcoin allocations range from 0.03% to 26%.

Based on this analysis, investors seeking to minimize volatility would allocate between 0.03% and 1.28% to bitcoin.

Investors seeking to maximize Sharpe Ratio would allocate between 4.8% and 25.78% to bitcoin.”

A quarter of the portfolio is at the low end for many cryptonians, but for investment managers dealing with billions or even trillions, it sounds like the low end for the braver ones is 5%.

So general advice now perhaps should evolve to allocating between 1% to 5% of investable capital for maximum potential reward while minimizing potential risk.

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Cosmos, Dogecoin, XRP Price Analysis: 20 September

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XRP, at the time of writing, was showing no signs of price movement in either direction in the near-term. Similarly, Cosmos was likely to be neutral or bearish, until overall market conditions took a turn towards the bullish side. Dogecoin, the popular meme-coin, was also stagnant across its price charts.

XRP

XRP, Cosmos, Dogecoin Price Analysis: 20 September

Source: XRP/USD on TradingView

XRP is the fourth-largest cryptocurrency in the market with a market capitalization of $11.27 billion. It was trading at $0.25, at press time, with the crypto-asset’s level of resistance laying at $0.267, while the support was at $0.23.

The MACD highlighted a bearish crossover and gave a sell signal. However, the Signal line and the MACD line have been moving quite close to each other for the past few days, indicating a lack of strength in the market. The Awesome Oscillator concurred, as its histogram gave a sense of weak bullishness.

A strong move above or below $0.25 could set the stage for XRP’s next move.

In related news, a report compared the function of XRP in 2017 to USDT in 2020 and found that stablecoins like Tether have been adding $100 million in market cap each day for the past several months. Since its launch, XRP has aimed to be the future of digital payments in cryptocurrency, but it appears that Tether has surpassed it in both adoption and market capitalization.

Cosmos [ATOM]

XRP, Cosmos, Dogecoin Price Analysis: 20 September

Source: ATOM/USD on TradingView

At the time of writing, the latest candle on ATOM’s price charts was suggesting that a possible surge towards $5.45 may be forthcoming.

However, this is unlikely. The OBV showed the steady sale of ATOM, highlighted by the lower highs formed. Further, the Chaikin Money Flow was exhibiting significant fluctuations in recent days, flipping from bullish to bearish territory multiple times, as buyers and sellers wrestled for control.

Overall, it is more likely that ATOM will head south.

Dogecoin [DOGE]

XRP, Cosmos, Dogecoin Price Analysis: 20 September

Source: DOGE/USDT on TradingView

Ranked 51st on CoinMarketCap, Dogecoin appeared to have ended its slump from mid-August. It has been noting a period of consolidation since the first week of September and could continue to float languidly around $0.028 in the coming days.

The RSI was moving irregularly around the neutral 50 zone, a sign of the market’s choppiness and indecision.

Dogecoin took a baby step towards recovery after ending its downtrend from August. A close above $0.029 would be another bullish step.

Source: https://eng.ambcrypto.com/cosmos-dogecoin-xrp-price-analysis-20-september

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