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Bitcoin's Past Growth vs. Future Thesis
Should you allocate based on past returns?
Adam Blumberg
February 22, 2024
Bitcoin’s Past Growth vs. Future Investment Thesis
Remember those wild stories about early Bitcoin investors turning pocket change into fortunes? Those days when Bitcoin was just a big experiment, a digital "wild west"? Well, we've been chatting about how those early days compare to where we're at now and, more importantly, where we're headed.
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From Wild Risks to a New Kind of Promise
Back in the day, investing in Bitcoin was like jumping out of a plane without knowing if your parachute would open. It was all speculation, excitement, and, let's be honest, a bit of a gamble. But wow, did it pay off for some! Yet, as much as we love a good "rags to riches" story, the Bitcoin we see today is playing in a whole different league.
We've got big institutions cozying up to it, and even the regulators are giving it a nod with things the bitcoin spot ETFs. It's not just about luck anymore; it's about smart, informed decisions.
So, What's the Deal for Us Advisors?
Thinking about adding Bitcoin to your client's portfolio? It's not as straightforward as looking back and dreaming about what could've been. The past? That was a different game with different rules. Today, it's about understanding the here and now - the tech, the rules, the market dynamics, and how they all come together.
Talking Strategy in a Whole New World
If you’re helping your clients invest in bitcoin now, you don’t have to take the same risks the early adopters and OGs took.
We already have ETF approval. We already have institutions and public companies owning bitcoin on their balance sheets. We have hedge fund titans adding it to their holdings.
The adoption is happening all over the world.
We also have some of the investment theses playing out. Money printing has led to inflation. Interest rates are higher. Geopolitical unrest is causing a shift in why we might need to hold assets outside the traditional systems.
Your mission, should you choose to accept it, is to think about how all these changes impact your advice, your strategies, and your clients' expectations. It's about being ready for whatever comes next, armed with knowledge and a plan.
Why This Matters to You (Yes, You!)
As advisors, we're not just here to guide investments; we're here to educate and set the stage for what's coming. You should be determining if the bitcoin of today, the world of today and tomorrow fits with your clients’ risk profiles and allocations.
You should also be setting appropriate expectations, based on your understanding of the technology and the investment theses.
Wrapping It Up with a Bow
Looking back at Bitcoin's journey offers lessons, but the road ahead is where our focus should be. It's about understanding the landscape and preparing our clients for what lies ahead with confidence and clarity.
We Launched a Podcast!
Years ago we had a podcast about crypto and DeFi, and we decided to re-launch the Interaxis Podcast. Now we’re talking about the happenings in crypto, and how they affect you, the financial advisor.
If you’re enjoying this, tell your friends. Always something happening in crypto and we’ll break it down for you.
See you next week!
-Adam