A Crypto-Centric Investing Future
|By Jurica Dujmovic|
As the world grapples with a new era of global economic transformation, investors are confronted with an unprecedented range of challenges … and opportunities.
This is especially the case for the realm of cryptocurrencies. Once viewed as a playground for tech enthusiasts, cryptos are now firmly established as a legitimate asset class, gaining traction and acceptance from financial institutions and regulators worldwide.
For proof of institutional adoption, look no further than financial giant BlackRock’s (BLK) recent Bitcoin (BTC, “A-”) exchange-traded fund filing. It has single-handedly thawed any traces of crypto winter and sparked interest in both old and new investors.
Joining me this week to discuss if institutional adoption has truly changed the crypto market outlook, as well as if there are any new favorites besides Bitcoin, are three experts.
Expert No. 1: Peter Eberle
First to take the stage is Peter Eberle, president and CIO of Castle Funds, which is an investment firm that has been managing funds invested in Bitcoin and other digital currencies since 2017.
He argues that we are currently witnessing a monumental socioeconomic transition, and his viewpoint reflects a broader industry shift in perception. Namely, the once-controversial idea that cryptocurrencies might become an important element of the global financial landscape has become increasingly accepted, if not seen as inevitable.
Institutional acceptance of cryptocurrencies has been a long-awaited sign of maturity in the crypto space. And Eberle believes that recent movements by regulatory bodies, such as the U.S. Securities and Exchange Commission, aim to protect traders and ensure a proper framework exists to safeguard this expanding industry.
Simultaneously, global banking giants like Deutsche Bank (DB) and investment management companies like BlackRock have also begun to show signs of increasing acceptance toward cryptocurrencies. Such acceptance, in Eberle's opinion, is far from an attack on the crypto industry.
In fact, these developments could be considered beneficial for both the industry and the individual investor.
Having a clear understanding of how governments and major financial institutions perceive and handle crypto is vital for building a robust industry. In this newfound clarity, Eberle sees the potential for encouraging more investment and participation in the cryptocurrency market.
But within this rapidly maturing field, where should an investor look?
According to Eberle, Bitcoin — often hailed as the gold standard of cryptocurrencies — is still an excellent choice for investors. He attributes its appeal to its relative stability and recent gains, characteristics that have made it an attractive asset for both seasoned investors and newcomers alike.
Bitcoin's proven resilience and continued innovation have made it a secure and reliable investment, with many viewing it as “digital gold.” With a limited supply and decentralized nature, it offers a hedge against inflation, which is especially appealing in times of economic uncertainty.
However, Eberle also acknowledges that the crypto space is more than just Bitcoin. For those seeking to embrace crypto for the first time, he suggests looking into Ethereum (ETH, “B”) as a solid alternative.
As the second-largest cryptocurrency by market cap, Ethereum has proven itself with its unique offerings. Beyond being a mere cryptocurrency, Ethereum is also a platform for building decentralized applications and executing smart contracts, giving it significant potential in the ongoing blockchain revolution.
In Eberle’s perspective, the future of investing could very well be crypto-centric.
Expert No. 2: David Birnbaum
Next up, we have David Birnbaum, vice president and director of product at Coinbits — a financial services company that helps everyday investors buy, sell and use Bitcoin.
His perspective centers around how the global economy is currently being reshaped by technology, geopolitics and mathematics. Although old-school investors are typically conservative with their strategies, he acknowledges that even experienced professionals are now recognizing that they may need to recalibrate.
In particular, Birnbaum draws attention to the current abundance of dollars in the world economy and the looming specter of runaway inflation. As concerns mount, adversaries of the U.S. seek ways to de-dollarize trade, which adds another layer of complexity to the global financial landscape.
Under these circumstances, Birnbaum invites us to reassess our concept of “safe” and “risky” assets. Assets that were considered safe havens in the past, he suggests, are now increasingly risky.
But could assets formerly seen as “risky” be transitioning to mature, reliable stores of value and growth?
For Birnbaum, this is where Bitcoin enters the picture. Unlike other assets, Bitcoin is not prone to the same risk factors. Its supply cannot be inflated arbitrarily, and its decentralized nature makes it resistant to shutdowns or restrictions — even on a global scale.
This resilience has given Bitcoin a unique standing in the financial world, which, according to Birnbaum, makes it the top choice for smart investors.
That’s why he confidently ranks Bitcoin as all three of his top three cryptocurrencies, underscoring his strong belief in its unrivaled potential. Traditional assets like real estate and gold might still hold relevance as hedges against potential black swan events, but Bitcoin's fundamentals, in Birnbaum's view, are even stronger.
Birnbaum also touches on the status of value and growth stocks, which many consider mainstays of any balanced investment portfolio. While these may offer gains in the short term, he warns that their performance is heavily dependent on monetary policy and the political climate in the U.S. — two elements notoriously difficult to predict.
Moreover, Birnbaum suggests that the stock market is now akin to a single asset, exhibiting strong internal correlation. This viewpoint presents an interesting shift from traditional investment advice, which often advocates for the diversification of assets to spread risk.
The primary goals of most investors, Birnbaum notes, are to preserve wealth, grow it, and eventually leave a legacy for their families. Bitcoin, he argues, can achieve all these objectives without necessitating complex strategies or constant market vigilance. Its nature as a deflationary asset makes it a reliable store of value, while its proven record of growth potential speaks to its viability as an investment for the future.
Overall, Birnbaum firmly believes in the irreplaceable role of Bitcoin in the current investment landscape.
Since its inception, other cryptocurrencies have tried and failed to overtake it. Bitcoin, he emphasizes, has established itself as the dominant language of digital value. Betting against it, or on the emergence of a superior competitor, would be, in his words, "a fool's errand."
Expert No. 3: Mila Wild
Unlike Eberle and Birnbaum, Mila Wild, marketing manager at crypto exchange platform ChangeHero and investor since 2011, embraces a broader scope.
For Wild, the crypto landscape offers a host of opportunities that extend beyond the realm of Bitcoin. Her approach toward crypto investments reflects a belief in the broader adoption and growth of this asset class.
Wild begins her analysis by taking an expansive look at the state of the crypto market, which has been wrestling with a bearish phase over the past year. She cites global economic instability — such as the rise of inflation in the U.S. and other countries — as well as disruptive events within the crypto market, like the collapse of Terra (LUNA) and the bankruptcy of the FTX crypto exchange, as key factors that have led to a challenging market situation.
Despite these tumultuous times, she sees a glimmer of hope.
Just like her colleagues, Wild views the BlackRock BTC ETF as one of the best developments for Bitcoin in recent times. It is poised to make investments in cryptocurrencies more accessible to stock market investors, both retail and institutional. This could potentially attract a large audience and a significant inflow of funds into the crypto market.
Although she acknowledges there will be an onslaught of regulatory challenges that need to be sorted out before any spot ETFs for Bitcoin are approved, Wild remains optimistic about the future.
Now, when it comes to crypto investments, Wild has a more diversified approach. She suggests allocating resources between top cryptocurrencies and certain altcoins that possess solid fundamentals and potential for growth.
In particular, the cryptocurrencies that she has her eyes on are:
- Bitcoin: Similar to Birnbaum and Eberle, Wild recognizes the significance of Bitcoin in the crypto market. She attributes its growth potential to its scarcity, independence from inflation and increasing adoption by top companies and even governments.
- Ethereum: Unlike Bitcoin, Wild acknowledges that Ethereum can be more volatile. However, she believes that with market growth, this volatility can result in bigger benefits for investors.
- Binance (BNB, “C-”): BNB, the native cryptocurrency of the Binance ecosystem, has piqued Wild's interest. Despite the recent conflicts involving Binance and the SEC, she remains confident in the platform's potential and foresees a price spike for BNB.
- Ripple (XRP, “B-”): XRP is another cryptocurrency on Wild's radar. Despite ongoing legal battles with the SEC, experts believe that Ripple will eventually triumph, leading to a surge in its price.
- LiteCoin (LTC, “B”): LTC's appeal lies in its low fees, making it an attractive instrument for everyday payments. Wild is especially optimistic about the LiteCoin halving expected to occur in August 2023, which she predicts will cause LTC to skyrocket.
- Trust Wallet Token (TWT, Not Yet Rated) and SafePal (SFP, Not Yet Rated): Wild also sees potential in the tokens associated with popular crypto wallets, such as Trust Wallet and SafePal. With mass crypto adoption, the need for crypto wallets will grow, and the tokens associated with these wallets stand to benefit.
Overall, I believe Wild's perspective enriches the conversation on crypto investments by advocating for a more diversified approach, highlighting various cryptocurrencies that offer promising potential. Her optimism for the future, fueled by the belief in broader crypto adoption, offers a fresh take in contrast to her more Bitcoin-focused colleagues.
There you have it.
In this rapidly evolving financial landscape, my guests offer three distinct — but complementary — pathways into the realm of cryptocurrencies. From Bitcoin's enduring appeal to Ethereum's transformative potential and Wild's wide array of promising altcoins, we're left with an invigorating tableau of investment possibilities.
As we grapple with the implications of these insights, we invite you to weigh in on the discussion.
Join us on Twitter @WeissCrypto and let me know: What's your take on the future of crypto? Will you tether to the unwavering confidence in Bitcoin, explore the dynamic potential of Ethereum or spread your bets across the compelling spectrum of altcoins?
Your move, investors.