It’s been a rough few months for crypto owners. And if this is your first experience with a downturn, I want to assure you that this is nothing unusual. I strongly suspect we’re at or near the bottom of this market.
Crypto markets are highly volatile and will remain so for the foreseeable future. The important thing is that crypto’s long-term growth trend is intact. We’re still up big from one year ago, up huge from two years ago and so on. On top of this, I see multiple near-term catalysts that could propel this market far higher.
First of all, cryptocurrency awareness is greater than it’s ever been. If you had told me 18 months ago that every major financial outlet would report on crypto daily, I’d have called you crazy. But that’s exactly where we are today.
It takes most people six to 12 months to get comfortable with the idea of buying crypto. That means many people who have been learning about crypto over the last year will likely come into the market soon.
I’m also closely watching developments on the institutional move into crypto. For the first time, large investment firms are gaining access to crypto markets. Soon they’ll be able to buy and store cryptocurrency in a secure, regulated way. This could be a game-changer on its own. (For more on this topic, read my piece on Bakkt, the new cryptocurrency company created by the New York Stock Exchange’s parent company.)
Why do financial firms and money managers want cryptocurrency? For the same reasons we do. Bitcoin, for example, is a hedge against fiat currency crises, a non-correlated asset and an emerging store of value (which is why it’s called “digital gold”). I believe bitcoin will eventually challenge gold as the world’s leading “hard money” store of value.
And thinking even more long term, I see cryptocurrency replacing fiat cash as the leading form of money. We’re talking about a much longer timeline there, but every crisis in the old financial system will propel crypto further in the direction of mainstream adoption.
For these reasons, bitcoin and a few select cryptocurrencies have higher potential returns than any other asset on the planet.
At some point, everyone will realize the risks of not owning crypto outweigh the risks of owning it. It’s likely the future of money, and it’s growing at an incredible pace. How can institutional investors ignore this? In my view, they can’t, and they won’t for much longer.
I believe our portfolio is well-positioned for the next crypto boom, and I think that boom will come much sooner than most people expect.
The currency crises happening around the world today will accelerate crypto adoption. And there will be no shortage of monetary disasters worldwide going forward. This, along with the market opening up to institutional investors, makes for a powerful combination.
As always, my advice is to keep holding and buy the dips if you can. Needless to say, never invest more than you can afford to lose. There’s always risk in crypto markets, but the upside far outweighs it, in my view.
Co-Founder, First Stage Investor