While 2020 has brought forth a litany of world issues, it has also been quite kind to digital assets like Bitcoin. We recently highlighted newfound interest in Bitcoin on August 13th, with examples ranging from service providers, hedge funds, and more.
One month later, are these new market entrants happy with their purchase? Will the trend continue?
The headliner in our previous look was undoubtedly MicroStrategy. As the world’s largest intelligence firm, it made quite the splash, with a lump sum purchase of 21,454BTC – which equated to roughly $250M USD.
This, however, was not enough to satiate the forward-looking company, as it just purchased an additional 16,796BTC; bringing the company’s cumulative BTC holdings to 38,250 – roughly $425M USD.
If the company’s first BTC purchase wasn’t enough of an endorsement, this increased exposure to the asset certainly is.
MicroStrategy, like most companies, experienced hardships due to the effects of COVID. Perhaps coincidental, the company has experienced a significant uptick is share value since its first BTC purchase. As a result, the company has seen its shares attain similar value to pre-COVID.
While MicroStrategy continues to be enamoured with BTC and what the asset has to offer, not all investors have developed this type of affinity. Of our recently covered market entrants, Dave Portnoy stands out as having a bad experience.
Mere weeks after making a high-profile entrance into crypto markets, Dave Portnoy has indicated, via twitter, that he has exited crypto to complete further market research.
This move was attributed to a decision to purchase Chainlink – a purchase which turned out to be ill-timed, as the asset crashed in the following days.
Now that we’ve taken a brief look at each, a positive and negative experience, by recent market entrants, are others still fearful of the asset?
Respected investor and host of ‘Mad Money’, Jim Cramer, has warmed up to Bitcoin, becoming the latest high-profile name to enter the world of digital assets. He recently let his evolving views of Bitcoin be known on a podcast with Anthony Pompliano.
Like many, Jim Cramer has listed fear of inflation as the main reason for attaining Bitcoin. While still an ambassador for gold, he now views Bitcoin as another valid hedge, albeit with more potential upside.
Interestingly, Jim Cramer notes that part of his reasoning for becoming more accepting of Bitcoin is his children. He has recognized that while wealthy/older investors today are still interested in safe-haven assets like gold, this will not be the case for the next few generations, as they grow up in an increasingly digital world. He likens this old-school affinity towards gold as ‘using a typewriter’ in a modern world. Overall, he states, on various occasions, that he ‘needs to do this for his kids’. This is a refreshing attitude and approach, as many focus on the present and how to make themselves wealthy (at the expense of future generations).
While he will not be making a splash to the same extent as MicroStrategy, Jim Cramer has indicated that he will be allocating roughly 1% of his portfolio for exposure to Bitcoin.
Building a Hedge
Although each investor’s intentions may vary, there is one clear motivating factor behind the majority of these new market entrants – hedging. With the world continuing down a path of economic uncertainty, investors worldwide have been flocking to safe-haven assets, such as gold. With continued adoption of BTC, and the development of industry services, the once nascent asset is quickly turning into a legitimate and respectable store of value; A store of value that many believe will one day rival gold and similar precious metals.