Investors on Wall Street and large corporations are increasingly viewing bitcoin as a long-term investment option. Bitcoin has reached a significant milestone by surpassing $100,000 for the first time, according to Bernstein on Thursday, suggesting it may be on the verge of taking gold’s place as the premier store of value in the global economy.
Analyst Gautam Chhugani stated, “Our belief in Bitcoin goes beyond temporary fluctuations,” forecasting that the cryptocurrency could hit $200,000 by the end of 2025.
Chhugani added that Bitcoin is expected to become the leading ‘store of value’ asset, ultimately replacing gold over the next decade and becoming a staple in institutional multi-asset allocations and corporate treasury management.
This forecast follows bitcoin’s recent achievement of crossing the $100,000 threshold on Wednesday. The cryptocurrency has experienced significant growth since Donald Trump’s election, as investors anticipate a more crypto-friendly administration and regulatory climate.
Such positive sentiment has triggered an influx of buy-and-hold strategies across Wall Street, Chhugani observed.
Since their launch earlier this year, bitcoin spot ETFs have garnered approximately $100 billion, making them the fastest-growing ETFs in history, he stated. Concurrently, the business software firm MicroStrategy has been vigorously implementing a “bitcoin treasury strategy,” currently holding over $40 billion of bitcoin as an asset, with other companies beginning to adopt similar strategies.
Bernstein explained that ETFs have enhanced bitcoin’s appeal as a “store of value” by providing traditional investors with a more straightforward method of holding the cryptocurrency. Furthermore, updated guidelines from the Financial Accounting Standards Board will facilitate corporations in holding bitcoin on their balance sheets, promoting wider adoption.
Chhugani wrote that corporate treasuries are expected to drive fresh, incremental demand moving forward, with MicroStrategy and several smaller companies currently leading this push for bitcoin treasuries.
The transformation of bitcoin into a buy-and-hold asset class for institutional investors could undermine gold’s position in global finance. Gold is traditionally maintained in global reserves due to its limited supply, which has historically increased its value.
However, bitcoin’s design also features a capped maximum supply of 21 million tokens.
Some analysts on Wall Street even speculate that the U.S. government may adopt bitcoin’s “store of value” characteristics, suggesting that the Trump administration might create a national bitcoin reserve. Senator Cynthia Lummis has proposed the possibility of the government acquiring additional bitcoin for this initiative by liquidating Federal Reserve-held gold certificates.
BlackRock advises that investors interested in bitcoin should consider allocating 1%-2% of their portfolio to the digital currency
According to BlackRock, bitcoin should be included in traditional multi-asset portfolios for those interested, but only to a “reasonable” level, as stated on Thursday.
The largest asset manager in the world suggests that those looking into bitcoin should assign 1%-2% of their portfolio to the cryptocurrency, which would equate to a similar risk level as holding the Magnificent Seven mega-cap stocks within a conventional portfolio.
“In a standard portfolio composed of 60% stocks and 40% bonds, these seven stocks represent, on average, a comparable share of total portfolio risk as a 1-2% investment in bitcoin,” the analysts articulated in a recent research note from BlackRock Investment Institute.
“We believe that this range for bitcoin exposure is reasonable,” they emphasized. However, they cautioned that going over 2% would significantly heighten the risk associated with the cryptocurrency.
“Exceeding that would sharply raise the percentage of overall portfolio risk attributed to bitcoin,” the analysts noted.
The firm indicated that this framework is useful for assessing the potential risks of incorporating bitcoin into a portfolio, given its volatile reputation. The cryptocurrency has surged recently, gaining 48% since Donald Trump won the U.S. presidential election last month.
Following that victory, Trump appointed several crypto advocates to positions within his administration, including Paul Atkins as chair of the Securities and Exchange Commission. This announcement last week contributed to bitcoin surging past the critical $100,000 mark for the first time in history. The cryptocurrency is up around 136% this year.
“Alongside its higher average volatility over time, bitcoin has also undergone significant selloffs. In an extreme scenario where broad adoption of bitcoin seems unlikely, an investor could lose the entire 1-2% allocation,” they articulated.
Nonetheless, the analysts pointed out that investing up to 2% in bitcoin would offer a diverse risk source when compared to investing heavily in major tech stocks while still controlling risk exposure.
“Despite bitcoin’s relatively low correlation with other assets, its higher volatility renders its impact on overall risk contribution similar. Including bitcoin in a portfolio would provide a distinct source of risk, whereas an overemphasis on the magnificent seven would contribute to existing risk and increase concentration within the portfolio,” the analysts suggested.
They concluded that the broader acceptance and trading of the cryptocurrency could help to lessen its volatility, thus reducing its overall risk contribution to portfolios.
On the other hand, increased adoption could also lead to a diminished structural driver for substantial price increases, they noted.
“The rationale for a long-term investment may then be less straightforward, and investors might choose to utilize it strategically to mitigate specific risks, much like gold,” they mentioned.
Wider adoption and trading seem probable, considering the more accessible options for gaining exposure to bitcoin, such as the plethora of spot bitcoin ETFs from companies like BlackRock. Since their inception in January, these ETFs have attracted over $113 billion in assets.
Reasons more companies are pursuing bitcoin purchases are growing. MicroStrategy’s investment in bitcoin has sparked a significant surge in the share price of the software company and is motivating more businesses to follow suit.
MicroStrategy’s cryptocurrency strategy has propelled its stock to increase by 501% this year. Although its main business revolves around software, accumulating a substantial amount of bitcoin has become its primary focus.
Now, other companies are starting to follow suit. Adopting MicroStrategy’s method, firms are raising capital through debt to acquire bitcoin. Early adopters of this strategy include Marathon Holdings and Core Scientific—both involved in crypto—as well as Japan’s Metaplanet.
Simultaneously, more corporate boards are approving straightforward bitcoin acquisitions. While bitcoin holdings are not exclusive to MicroStrategy, it is still uncommon for firms outside the cryptocurrency sector to invest. However, a recent $1 million acquisition by biopharma company Acurx Pharmaceuticals indicates a change in sentiment.
“Transactions that were once speculative and typical in the crypto space are fading away, and the increasing institutional interest in building reserves based on bitcoin reinforces this,” Gracy Chen, CEO of the cryptocurrency exchange Bitget, shared with Business Insider.
Is it diversification or a quick profit?
In a note from December, Bernstein analysts indicated that bitcoin may substitute gold as the foremost “store of value” asset and become a standard component in corporate treasury holdings.
Chen highlighted that bitcoin has established itself as a safeguard against inflation and economic turmoil, which could appeal to companies as global instability rises. This perspective is gaining traction—recently, a think tank suggested that Microsoft should contemplate purchasing bitcoin for this reason, with a comparable suggestion presented to Amazon’s shareholders.
Of course, bitcoin’s impressive triple-digit rise this year also fuels ambitions for significant profits, exemplified by MicroStrategy’s dramatic stock surge. The company has amassed bitcoin by offering interest-free convertible debt that pays off if bitcoin continues to rise. The success of these ventures has propelled its stock price.
“Assuming a bitcoin price of $97,400, the value of the bitcoins the company has generated this year is around $7.7 billion, and it’s significant to note that this value has been created without the capital expenditures and operational expenses associated with bitcoin mining,” remarked Mark Palmer, managing director of Benchmark Company, in November.
However, firms aiming to duplicate this success should proceed with caution, Chen warned. New entrants encounter a much higher bitcoin price than when MicroStrategy commenced its purchases.
Companies acquiring bitcoin through leveraging also face increased risks if bitcoin’s value suddenly declines: while the price of the cryptocurrency might fall, the debt obligations remain.
Although this concern has also surfaced for MicroStrategy, Palmer mentioned to BI that the firm has weathered previous downturns and has diversified approaches to acquiring bitcoin.
“If bitcoin were to drop to a level where MicroStrategy’s trading value fell below its [net asset value], the company could create shareholder value through share buybacks, and I believe this flexibility is a significant asset the company has cultivated,” he explained.
Not everyone supports this trend.
On Wednesday, Microsoft shareholders rejected the think tank’s proposal urging the tech giant to invest in bitcoin. Prior to the vote, the board advised shareholders to dismiss the idea as well.
This outcome was anticipated, Chen stated, as many Microsoft shareholders likely prioritize the stability of the company’s assets.
“Investing in Bitcoin might add extra risk to investing in MSFT, while many investors have chosen MSFT for its consistent performance,” she conveyed to BI, adding later, “For shareholders creating their own diverse portfolios, introducing cryptocurrencies into corporate balance sheets can complicate a company’s valuation and detract from the fundamental business goals that investors are interested in.”
R360 is an exclusive investing club whose members have an average net worth above $500M
When Charlie Garcia established R360, an organization that cultivates a community of individuals with a net worth exceeding $100 million, a significant portion of its members had yet to embrace bitcoin as a viable investment, particularly among the older demographic.
However, starting last year, a number of the organization’s 134 members, who have an average net worth of just over $500 million, began to shift their perspectives, Garcia shared with Business Insider.
Currently, many view bitcoin’s potential to emulate the traits of real estate: a scarce asset that could one day serve as valuable collateral for loans. Some influential members are also taking proactive steps to safeguard their investments, including meeting with Donald Trump to potentially influence the future US President’s stance on bitcoin.
The possibility of a crypto-friendly administration has propelled bitcoin’s value upwards: since Election Day, the price of the digital asset has increased nearly 50%. Nevertheless, skepticism towards this volatile digital asset, which was originally intended as a currency, persists, especially as its foundational purpose remains largely unattained.
Here’s how a group of initially doubtful centimillionaires overcame their reservations, how they now perceive bitcoin, and their investment strategies regarding it.
The bitcoin inclination
R360 was originally designed to assist members in attaining what it identifies as six types of capital: financial, intellectual, social, human, emotional, and spiritual, based on the notion that wealth encompasses more than just monetary value. Areas deemed crucial for mastering success and responsible wealth stewardship, according to Barbara Goodstein, a managing partner in the organization.
The membership is quite diverse, with ages ranging from 30 to 87 and an average age of 45 to 55. Garcia estimates that approximately 80% are first-time entrepreneurs, while 20% are descendants who inherited their wealth or acquired it through divorce. Membership fees are substantial, costing $70,000 annually or $180,000 for a three-year commitment, and the vetting process requires an interview along with multiple peer references.
Garcia, who has long been a bitcoin proponent, founded the group in 2020, and meetings officially commenced in 2021. At the inaugural meeting, each member received a bitcoin wallet featuring the organization’s logo. They were assigned a task to receive and transact using bitcoin. “So they left with literally a bank,” Garcia recounted.
Despite this, many members still perceived it as a fraud or believed it was in a bubble. The digital asset’s image was clouded by the multitude of altcoins and memecoins that collapsed following the crypto bull market of 2021.
It took several presentations, with a notable one conducted by a hedge fund manager in October 2023, to finally persuade those still uncertain to invest in the asset, which is regarded as scarce due to its cap of 21 million.
“One of our members is the leading hedge fund manager globally, with a five-year track record. He presented his best idea when bitcoin was roughly $25,000 at that time,” Garcia noted.
The speaker reiterated a discussion he had with businessman and bitcoin advocate Michael Saylor regarding bitcoin’s increasing value compared to real estate. He pointed out that when bitcoin was valued at $10,000, it required 39 bitcoins to purchase the average US home priced at $391,900, and by May 2024, when its value reached $28,000, only 15 bitcoins were needed, reflecting a 2.6 times increase in purchasing power.
As many members were real estate investors, this contextualization resonated with them, Garcia explained. Currently, based on data gathered from the group’s annual financial capital meeting, Garcia estimates that among the 134 members, the average portfolio allocation to bitcoin is approximately 2.5% to 3%, with about 25 members possibly holding over a 10% allocation.
However, the future price potential of bitcoin is not the sole attraction for R360 members. With robust incoming support for it in Washington, they foresee it playing a larger role in traditional banking.
“We anticipate that within a year, banks will be permitted to hold your bitcoin, allowing you to borrow against it and earn interest in either dollars or bitcoin as compensation for custodying those assets,” Garcia stated.
If banks begin to hold bitcoin, it is likely they will offer loans or lines of credit against it, Garcia added. This belief is not unfamiliar or exclusive to R360 members. For years, many bitcoin enthusiasts have maintained that the asset’s scarcity and demand will position it as a reliable asset to anchor value and currencies. For this reason, members are counseled against selling their holdings.
Conversations about the future
Currently, members of R360 are generally supportive of bitcoin and frequently engage in discussions about advancements related to the asset during their monthly meetings, which are attended by individuals who manage their own finances, often due to backgrounds in the financial services sector, as Garcia explained.
Some members are actively working to ensure that the new administration will be favorable toward the asset by helping to evaluate candidates chosen to join President-elect Donald Trump’s upcoming administration.
“Particularly, two of our members were instrumental in meeting with Trump to change his perspective on why he should endorse bitcoin and how it could benefit the United States. One of our members owns both the Bitcoin Conference and Bitcoin Magazine. Moreover, the spouse of another member, who is also deeply involved in bitcoin, wrote Bobby Kennedy’s speech for that event,” Garcia stated.
“They are insiders gathering at Mar-a-Lago. Whenever this White House crypto group is made public, they are present. They are influencing candidate selection by voicing their opinions on which candidates support bitcoin and which do not. Thus, they are impacting the appointments being made and the legislation being crafted.”
One member Garcia mentions is David Bailey, the CEO of BTC Inc and the organizer of the Bitcoin Conference, who extended invitations to Presidential candidates for the event in Nashville in July, where Trump and Bobby Kennedy attended. Garcia added that Bailey played a key role in changing Trump’s negative view of bitcoin.
How members are guided to acquire and retain bitcoin
The organization primarily recommends that its members keep their bitcoin in self-custody and offers instructional resources on how to transfer and store it in a cold storage wallet. For those who prefer not to manage this themselves, they suggest utilizing an institutional custodian. Garcia pointed out that this latter choice is more suitable for individuals with substantial amounts of bitcoin who are family heads, as it facilitates an easier inheritance process. The third option is to invest in a fund of funds to handle their exposure.
The organization does not advocate for purchasing bitcoin ETFs since they do not provide direct ownership of the asset. Furthermore, if Trump fulfills a campaign promise to designate bitcoin as an untaxable asset, the ETF may not enjoy the same tax advantages, as Garcia noted. Lastly, they caution against storing bitcoin on exchanges or in hot wallets due to security vulnerabilities.
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