Should you ‘follow the money’ on Bitcoin?
AS we celebrate the fourth Bitcoin halving, it’s not just a moment to celebrate a milestone in crypto, many would argue that it’s a clarion call for investors of all stripes to ‘follow the money’.
Traditional financial norms are increasingly being challenged, and, arguably, Bitcoin is the biggest disruptor of them all.
Banks and financial institutions, sovereign wealth funds, governments, major universities, legendary household name investors, business leaders, political leaders and celebrities are all becoming ever-more invested in Bitcoin for the long-term as it becomes an increasingly mainstream part of the global financial system.
Should almost every investor heed this call and secure some exposure to the digital gold rush?
Institutional giants
The traditional finance behemoths are no longer standing on the sidelines; they’re diving headfirst into the world of Bitcoin.
BlackRock, the world's largest asset manager with $9trillion of assts under management, this year launched the first regulatory-approved Bitcoin spot Exchange-Traded Funds (ETFs)
In February, BlackRock received a record $612 million into its industry-leading Bitcoin ETF and crossed $10 billion in assets under management, a day after the asset class hit a high of $7.7 billion in trading volume.
Other major players like Fidelity, Grayscale, VanEck and Ark were also approved by the US financial watchdog, the SEC, to launch similar ETFs.
The sheer weight of these giants entering the space speaks volumes about Bitcoin’s legitimacy as a store of value and investment asset.
Sovereign wealth funds
Sovereign wealth funds, responsible for managing trillions of dollars in assets for nations around the world, are also recognising the potential of Bitcoin.
Among others, take Norway’s Government Pension Fund Global, for example, which has indirectly invested in Bitcoin through its holdings in MicroStrategy, a business intelligence firm that has allocated significant portions of its treasury reserves to Bitcoin.
In March it was heavily reported, but unconfirmed, that Qatar’s sovereign wealth fund – which has around $500bn – might have invested $3bn into the cryptocurrency.
Such strategic moves by sovereign wealth funds underscore Bitcoin’s emergence as a global financial powerhouse.
Multinationals
Multinational companies are either invested in Bitcoin directly or have shown support for cryptocurrency in various ways.
For example, MicroStrategy, the business intelligence firm, led by CEO Michael Saylor, has become one of the most prominent corporate investors in Bitcoin. It has invested around $15bn in the crypto as part of its treasury reserve strategy.
Elsewhere, PayPal, the online payments giant, announced in 2020 that it would allow its users to buy, sell, and hold cryptocurrencies, including Bitcoin, Ethereum, and Litecoin. PayPal’s move was seen as a significant endorsement of cryptocurrency adoption.
Governments
It’s not just private institutions or funds that are embracing Bitcoin; governments themselves are starting to take notice.
El Salvador made headlines by becoming the first country to adopt Bitcoin as legal tender, a move that could pave the way for other nations to follow suit. Additionally, most major countries are exploring the possibility of launching their own central bank digital currencies (CBDCs), further integrating cryptocurrencies into the fabric of the global financial system.
Academic institutions
Major universities are also jumping on the Bitcoin bandwagon, recognising its potential not just as an investment but as a subject worthy of study.
Ivy League institutions like Harvard, Yale, and Brown have all reportedly invested in cryptocurrency funds, while universities such as MIT offer courses on blockchain technology and digital currencies.
As academia legitimizes Bitcoin’s place in the financial landscape, more investors are likely to take notice and allocate funds accordingly.
Household name investors
Legendary investors like Elon Musk, Paul Tudor Jones, Mark Cuban, Tim Draper and Stanley Druckenmiller have publicly endorsed Bitcoin as a hedge against inflation and a store of value.
Their endorsements carry significant weight in the investment community, inspiring confidence and prompting others to follow suit. When titans of finance speak, investors listen, and the growing chorus of endorsements for Bitcoin is perhaps impossible to ignore.
Business and political leaders
Beyond the realm of finance, political figures are also acknowledging Bitcoin’s significance.
Former US President – and republican nominee for the 2024 presidential election – Donald Trump is becoming increasingly pro-Bitcoin as he seeks a second term in The White House.
UK Prime Minister Rishi Sunak has consistently had a positive stance on crypto, hoping to make Britain a global hub for the sector.
Meanwhile, Miami’s Mayor, Francis Suarez, has expressed his desire to make his city a hub for Bitcoin and other cryptocurrencies and to take his salary in the crypto.
To my mind, the fourth Bitcoin halving is not just a milestone; it’s a rallying cry for investors worldwide to consider the opportunity presented by Bitcoin which more and more organisations and individuals are doing as they appear to ‘follow the money.’
Nigel Green, deVere Group CEO and founder
