The case for Bitcoin

Why every investor should own Bitcoin in their portfolio

Referred to as “gold of the digital world”, Bitcoin has quickly risen in popularity since it was first created. In December of 2017, Bitcoin reached its peak price of $19,783 before crashing into the $3,000 range. Over the past 3 years, however, Bitcoin has made a slow climb and is now close to reaching that initial peak once again. Here are some reasons I believe that every investor should own Bitcoin:

  • Bitcoin is a hedge against the current financial system: Bitcoin was created in the wake of the financial crisis by a person/persons who go by the pseudonym of Satoshi Nakamoto. The creator/creators clearly understood that the current system that we have in place does not operate in the best interest of the common people. Bitcoin aims to remedy this exact problem. There is only a limited amount of Bitcoin that can ever be mined, and once that number is reached, no more of this coin can be created. Unlike with the 2008 financial crisis or the 2020 global pandemic crisis, there is no government entity that can print or regulate Bitcoin at will. As a result, the value of Bitcoin will always remain stable and cannot be eroded away by monetary policy

  • Bitcoin is a digital replacement for gold: For many years now, gold has been the traditional hedge against the stock market. This means that when the market has fallen, people have expected gold to perform in a negative correlation with equities and thus protect investors from some of the downside. As of today, the total market capitalization of gold is roughly $9 trillion while the total market capitalization of Bitcoin is roughly $350 billion. If Bitcoin were to replace gold even by a factor of 10%, then we can expect Bitcoin to increase by a multiplier of about 2.57x from today’s current price.

  • Bitcoin is a hedge against the devaluation of the dollar: Following the March shutdowns due to the global Coronavirus pandemic, the Federal Reserve announced that it will be taking aggressive measures in order to keep the economy afloat. One of these measures was quantitative easing by printing more money. As a result, most economists are now expecting increasing levels of inflation in the coming years. This means that owning Bitcoin today is much more attractive than it was ever before.

How to get involved in Bitcoin:

  • Bitcoin (Ticker Symbol: BTC): Bitcoin is available directly on applications such as Coinbase and Cash App

  • Grayscale Bitcoin Trust (Ticker Symbol: GBTC): GBTC is an ETF that is composed only of Bitcoin.

  • Square (Ticker Symbol: SQ): Square’s Cash App is one of the primary marketplaces for Bitcoin.

  • PayPal (Ticker Symbol: PYPL): PayPal recently announced that it will now allow users to own Bitcoin on their platform.

  • Silvergate Capital (Ticker Symbol: SI): Silvergate Capital is one of the only banks which lends in digital currencies such as Bitcoin

  • NVIDIA and AMD (Ticker Symbol: NVDA/AMD): Bitcoin mining requires very high processing power which only NVIDIA and AMD can provide as of now

For informational purposes only and should not be considered investment advice or a recommendation to buy, sell or hold any particular security