The institutional potential continues to build in crypto markets. The public and mainstream media are finally starting to digest the fact that we’re on track for an institutional boom (starting with bitcoin).
For example, Barron’s just ran an article titled, “Bitcoin’s Hot and Wall Street Wants In Again.”
People are beginning to get it. Professional-grade custody solutions for crypto are being built and launched as we speak.
Still, much of the mainstream coverage is still negative. Today, for example, there’s a lot of concern over the SEC denying the bitcoin ETF proposed by the Winklevoss twins.
But this rejection was expected. It’s the other pending crypto ETFs that have a much better chance of being approved.
Specifically, we’re watching the VanEck SolidX Bitcoin Trust proposal. This fund is targeting institutional investors (big money). Each share will begin trading at $200,000. This is an ETF made for investment firms. These professional investors know the risks, and it will be hard for the SEC to argue that it’s protecting investors.
Van Eck is one of the largest names in the ETF business. It oversees $45 billion in assets. The firm is going through the back and forth with regulators right now. You can read more about it here.
Real Bitcoin, Not Futures
It’s important to note that the SolidX and Van Eck proposal will own physical bitcoin. Some proposed ETFs are based on futures markets only, not actual bitcoins. But this one is actual bitcoin.
Pressure is on the SEC to get these things approved. The public demand is clearly there. And most of the people pushing this forward are “true believers.” They’re not quitting.
In summary, I continue to believe this is a crypto buyer’s market. I particularly like bitcoin for the short term to midterm.
Portfolio Note: I believe bitcoin is set to outperform altcoins over the coming months. This is why we issued a recommendation recently on bitcoin, a coin most of you already own. This is me reiterating that bitcoin is a critically important part of any crypto portfolio, especially right now.
The first crypto ETF will almost certainly be based on bitcoin. It has the most exposure, liquidity and growth potential. Now is a fantastic time to own bitcoin.
Some altcoins will follow and catch on with institutional investors quickly. (I selected all our portfolio positions with these investors in mind, of course.)
And a certain percentage of bitcoin profits always flow into altcoins eventually.
But during this first wave of the institutional boom, I believe bitcoin should represent a large percentage of all of our portfolios. I’m aiming for around 55% in bitcoin. The 45% in altcoins provides plenty of extra upside and a hedge.
Eventually, some coin will beat bitcoin. But first, bitcoin will probably lead a few more manias and mega-booms. And I suspect it will always play a role similar to gold, or a crypto reserve currency.
I believe that in the future, we will be able to choose from hundreds of diverse and useful cryptocurrencies. We’ll diversify using indexes, or baskets, of coins. We won’t have to put all our eggs in one basket anymore. Baskets of various crypto assets will also help smooth out pricing.
Settlement and exchange between cryptocurrencies will take place automatically. The technology to do this is almost here.
But we have to remember bitcoin was first. And it has a large lead on everyone else right now. I recommend positioning yourself accordingly.
This is the situation as I see it today. As it changes, we’ll keep you informed.
Good investing,
Adam