Why Invest in Bitcoin?
That’s easy. Bitcoin is still in its infancy.
No, you aren’t too late. Yes, bitcoin is still here – and it’s growing stronger every day. The foundations that have driven bitcoin’s increasing value over the last decade still exist and there are four fundamental reasons why now may be the time to invest:
1. It’s Still Early: Bitcoin stands to capture value from a spectrum of large and diverse markets. Its value today is only a tiny fraction of the markets it stands to disrupt, which reach well into the trillions of dollars. What if Bitcoin takes even a quarter of the store-of-value market held by gold? What if it becomes the currency of choice for a few of the more unstable nations plagued by hyperinflation? What if it becomes one of the most popular currencies for mobile payments? These are just a few possible use cases.
DISRUPTION POTENTIAL (USD)1
HYPOTHETICAL BITCOIN PRICE AT 10% PENETRATION OF MAJOR MARKETS (USD)*
2. Generational Shift in Wealth: With an estimated $68 trillion in generational wealth changing hands over the next 25 years (including $68 trillion from Boomers), we may see more investment dollars make their way into uncorrelated assets like Bitcoin. A recent survey from Blockchain Capital shows millennials are much more likely to buy, hold, and use Bitcoin – the majority of which have not even hit their prime earning years yet. As a new generation is evaluating where and how to invest their money, Bitcoin is increasingly part of the mix.
SHIFTING DEMOGRAPHICS OF GENERATIONAL WEALTH3
3. Network Fundamentals Are Strong: Through a global transaction network, bitcoins can be sent securely across borders, in any amount, at low costs, as seamlessly as a text message, and without the need for trusted third-parties. Over 100,000 merchants worldwide now accept bitcoin.3 The number of active wallet addresses on the Bitcoin network continues to grow – a key sign of a vibrant and growing financial ecosystem – while the methods for sending, receiving, and storing bitcoins continue to improve at both the consumer and institutional levels.
BITCOIN NETWORK USER GROWTH VS. MARKET CAP5
4. Diversification is a Rewarding Strategy: Stocks and bonds don’t seem to be going away, but investing in digital currencies, like bitcoin, may help investors build even more diversified portfolios (with higher returns per unit of risk). Bitcoin has historically performed as an uncorrelated asset, meaning it does not necessarily move with stock or bond markets. As a result, it may provide benefits to an investment portfolio that previous generations of investors could only have dreamed of.
By sizing a bitcoin allocation properly, as part of a traditional investment portfolio (e.g. a 1-5% allocation), the risks of investing in bitcoin can be mitigated relative to potential gains. This is the power of diversification.
HYPOTHETICAL SIMULATED DIVERSIFIED PORTFOLIO WITH BITCOIN6*
September 25, 2013 through August 31, 2019
The Age of Bitcoin has only just begun, and the only better time to invest was yesterday. To learn more about GBTC, continue reading What is GBTC and How do I Invest in Bitcoin?.
Grayscale’s Director of Investments & Research, Matthew Beck, explores this idea in more detail in the Grayscale Insights Report: Bitcoin & the Rise of Digital Gold available at grayscale.co/insights/bitcoin-the-rise-of-digital-gold/.