Even More Billionaires Looking At Bitcoin

Bitcoin is coming to the end of one of the biggest years in its short history. The bitcoin price has surged through 2020, reclaiming its 2017 all-time highs after finding support from Wall Street and some of the world's biggest investors.

With the bitcoin and cryptocurrency community looking forward to a slew of developments in 2021—including the much-anticipated launch of Facebook's bitcoin-inspired cryptocurrency and potentially industry-defining U.S. cryptocurrency regulations—Wall Street giant Wells Fargo has said it expects to be "discussing the digital asset space more" next year.

"Over the past 12 years, [bitcoin and cryptocurrencies] have risen from literally nothing to $560 billion in market capitalization," John LaForge, head of real asset strategy at Wells Fargo, wrote in an investment strategy report this week.

"Fads don’t typically last 12 years. There are good reasons for this—reasons that every investor should hear. As we roll into 2021, we’ll be discussing the digital asset space more—its upside and downside."

LaForge pointed to bitcoin's 170% gain this year—"that’s on top of the 90% gain it had in 2019"—naming cryptocurrency investing as "a bit like living in the early days of the 1850’s gold rush, which involved more speculating than investing."

As well as speculative interest from traditional investors, bitcoin and cryptocurrencies have seen a surge in take-up from the likes of payments giants PayPal and Square this year—something that's expected to have an impact in 2021.

"2021 really centres around continual improvements in continuity between traditional markets and crypto markets," Pierce Crosby, general manager at financial data company TradingView, said via email.

"A perfect example would be Square's bitcoin offering or PayPal's payment via crypto. There are many such use cases for crypto, and we expect these to expand rapidly in the coming year. Trading will still be reflective of this adoption curve; the higher the adoption, the more bullish the overall trading mix will be, which is a bullish base case for the major crypto assets."

Ethereum, the world's second-largest cryptocurrency by value after bitcoin, has soared by 300% over the last 12 months amid a flurry of interest in decentralized finance (DeFi)—using crypto technology to recreate traditional financial instruments such as loans and insurance with many DeFi projects built on top of the Ethereum network.

"From the trading perspective, most of the year's focus has been on yield and structured products, we've seen a huge wave of futures products and options products come to market, and it's likely more will follow soon," Crosby said.

"We have seen some of the 'edge case' crypto-assets become mainstream as well, and this should continue in the new year."

Another legendary billionaire, Ray Dalio has also changed his tune on BTC after warning last month that bitcoin could soon be "outlawed." The legendary billionaire founder and co-chairman of the world's biggest hedge fund, Bridgewater Associates, has admitted bitcoin’s now established itself as a "gold-like asset alternative."

"I think that bitcoin (and some other digital currencies) has over the last ten years established themselves as interesting gold-like asset alternatives, with similarities and differences to gold and other limited-supply, mobile (unlike real estate) store holds of wealth," Dalio posted to Reddit in response to a question asking whether bitcoin could help combat the U.S. wealth inequality that may have been worsened by central bank stimulus measures.

Dalio, who famously branded bitcoin a "bubble" in 2017, appears to have changed his mind on whether bitcoin can act as a store of value.

"[Bitcoin's] not an effective store hold of wealth because it has volatility to it, unlike gold," Dalio said in a September 2017 CNBC interview, just before bitcoin's huge end of year boom and subsequent bust. The bitcoin price soared to around $20,000 in late 2017 after beginning the year at under $1,000. The price crashed back to around $3,000 in 2018.

Dalio advised investors to diversify their portfolios with assets that are "limited supply, that are mobile, and that are store holds of wealth," adding: "Not enough people do that."

Additionally, U.S. business intelligence firm MicroStrategy has increased its bitcoin holdings to over $1 billion and Massachusetts Mutual Life Insurance has bought $100 million of bitcoin for its general investment account.

Dalio, who's thought to have a personal fortune of almost $17 billion, according to Forbes estimates, is the latest big-name investor to name bitcoin as a potential investment.

Wall Street legend Bill Miller also said he "strongly" recommends bitcoin in November, shortly followed by billionaire U.S. investor Stanley Druckenmiller, who revealed he now owns some bitcoin—saying he's "warmed up to" the cryptocurrency as a store of value.

The rise of a parallel, global, decentralized financial system demands a permissionless, digitally native core reserve asset, a role BTC naturally fits. This is what a lot of big names in the investing space are now realising. Considering we are at all-time high prices and legendary investors have a completely different stance compared to the 2017 highs, it goes to show that it’s still not too late to jump on the crypto rocket ship.