Those who refuse to embrace the Bitcoin revolution will be overwhelmed.
The history of Bitcoin brings us back to the history of all the revolutions that have taken over the world. To fully understand the road traveled by Bitcoin since its creation by Satoshi Nakamoto a little more than twelve years ago, I bring you back to this quote:
“First they ignore you, then they laugh at you, then they fight you, then you win”
You have probably already heard this quote which is frequently attributed to Gandhi. It perfectly describes all the phases that a revolution goes through before finally triumphing.
In fact, it is an apocryphal quote since Gandhi is not the original author. The first to utter this sentence was a certain Nicholas Klein who was an American labor union advocate at the beginning of the 20th century.
In any case, this quote applies more than ever to Bitcoin today. Bitcoin is currently making the transition from the “They fight you” phase to the “Then you win” phase.
The special year of 2020 is accelerating this transition. Faced with the great monetary inflation that we are experiencing, more and more players in traditional finance are realizing that Bitcoin is here to stay. They are also becoming aware that Bitcoin is the best hedge against monetary inflation.
A greatly improved version of gold accessible to the greatest number of people.
Paul Tudor Jones had been the first famous macro investor to declare his flame at Bitcoin in early May 2020. Shortly before Bitcoin’s third Halving, Paul Tudor Jones had explained that he now favored the purchase of Bitcoin over gold as a hedge against the great monetary inflation.
At the same time, the Bitcoin fund of Grayscale investments was enjoying phenomenal success. The clients of Grayscale investments, who are more than 90% institutional investors, have been literally rushing to buy Bitcoin for several months.
The result is quite incredible as Grayscale investments currently holds over 509,000 BTC for its clients. This represents more than 2.75% of the outstanding supply of Bitcoin.
In the summer of 2020, it was MicroStrategy that made headlines when Michel J. Saylor, its CEO, announced that the company was making Bitcoin its primary treasury reserve asset. This resulted in two purchases of Bitcoin on the spot market for $425 million.
The 38,250 BTC owned by MicroStrategy now represents the equivalent of $700 million.
MicroStrategy’s strategy clearly shows the way forward for large companies in the U.S. and even around the world. Square joined this movement in early October 2020 by purchasing $50 million worth of Bitcoins.
The 4,709 BTC owned by Square today represents the equivalent of 86 million dollars.
At the end of October 2020, PayPal announced that it would officially enter the Bitcoin world as of January 1, 2021. PayPal will thus offer the purchase/sale of Bitcoin to its 346 million users around the world directly from its platform.
Nevertheless, PayPal has already started to offer this service to some American users. The success is such that PayPal has purchased 70% of all newly minted BTC since the beginning of November 2020.
The impact of PayPal’s entry has already been felt on the Bitcoin price. And this is only the beginning!
MicroStrategy, Square, and PayPal entries are boosting the credibility of Bitcoin and giving ideas to the biggest dogs on Wall Street.
Legendary investor Stanley Druckenmiller recently explained that he has a tiny bit of Bitcoin because he anticipates a bigger fall of the U.S. dollar:
“I own many, many more times gold than I own Bitcoin, but, frankly, if the gold bet works, the Bitcoin bet will probably work better, because it’s thinner and more illiquid and has a lot more beta to it.”
If Stanley Druckenmiller still has more gold than Bitcoin, he explains that if the gold bet works, the Bitcoin bet will work even better.
BlackRock, the world’s largest asset manager, has just admitted through a senior executive that “Bitcoin is here to stay”. Rick Rieder, BlackRock’s CIO of Fixed Income, explained that while he is not a Bitcoin Bull, he sees Bitcoin continuing to take the place of gold:
“Bitcoin will take the place of gold to a large extent [because] it is so more functional than passing a bar of gold around.”
Bitcoin’s greatest value proposition in 2020 is clear to all Wall Street players: Bitcoin is an improved version of gold that can protect your wealth from the ravages of inflation in a way that is resistant to censorship.
Bitcoin meets a need that will continue to grow in the months and years to come. Meanwhile, the Bitcoin supply will remain hard-capped at 21 million units …
While BlackRock has not yet entered directly into Bitcoin, it should not be forgotten that BlackRock already has indirect exposure to Bitcoin via MicroStrategy, of which it is a significant shareholder. Either way, it is more than likely that BlackRock will eventually purchase Bitcoin for its clients.
As of mid-summer 2020, U.S. banks have received the green light from the Office of the Comptroller of the Currency to buy and hold Bitcoin for their clients.
Long before this green light, Jamie Dimon, CEO of JPMorgan, had admitted he was wrong about Bitcoin and regretted calling it a fraud at the end of 2017. While Jamie Dimon also admits that he is not a Bitcoin fan, he explains that Bitcoin is here to stay.
From then on, JPMorgan started to enter the Bitcoin world by offering its banking services to Coinbase or Gemini. This is something important to secure the liquidity of these major trading platforms.
In the coming months, it is highly likely that JPMorgan will end up offering the purchase of Bitcoin directly to its clients.
Citibank has just published a report for its institutional clients explaining that the bank sees the Bitcoin price capable of reaching $318K by the end of 2021. That’s much more than the $100K that I am personally targeting, but it shows how enthusiastic and optimistic Wall Street’s biggest dogs are about Bitcoin now.
All these actors, who ignored and then denigrated Bitcoin a few months ago, realize that they will not be able to ignore the Bitcoin revolution in the future.
Now it is Wall Street’s biggest dogs who need Bitcoin. The balance of power is gradually shifting.
In the coming months, you can expect more players to enter the Bitcoin world. What started as the fantasy of a few geeks has over the years become a real monetary revolution that will take everything in its path.
Those who choose to be part of the Bitcoin revolution will be greatly rewarded. The others will end up being overwhelmed for not having been able to evolve. Wall Street realizes this more than ever today.