Research Summary
The report discusses three reasons why financial advisors should consider Bitcoin as an investment option for their clients. These reasons include Bitcoin’s historical performance, its scarce supply, and its potential as a store of value. The report also highlights the growing adoption of Bitcoin among institutional investors and businesses.
Key Takeaways
Bitcoin’s Historical Performance
- Decade of Remarkable Gains: Despite its volatility, Bitcoin has outperformed other asset classes over the past decade, being the best-performing asset class for eight out of the past eleven years. As of December 31, 2023, Bitcoin’s historical returns for various holding periods have been impressive, with a 10-year return of 6,172.12%.
Bitcoin’s Scarce Supply
- Increasing Value Over Time: Bitcoin’s supply is capped at 21 million coins, a feature designed to increase its value over time. The report notes that the price of Bitcoin has rallied leading up to and following each “halving” event, which reduces the reward miners receive for validating transactions by 50%.
Bitcoin as a Store of Value
- Digital Gold: Bitcoin’s fixed supply and increasing difficulty in mining new coins make it similar to precious metals like gold, which are considered long-term stores of value. As such, Bitcoin could be a good fit for clients looking to hedge against inflation, preserve wealth over the long term, and diversify their portfolio.
Bitcoin’s Growing Adoption
- Mainstream Acceptance: The report highlights that Bitcoin’s adoption has grown substantially in 2023, with more merchants and businesses accepting it as a form of payment. Infrastructure has been developed to make Bitcoin more user-friendly and accessible to the average person.
Institutional Interest in Bitcoin
- Attracting Big Players: Institutional investors, including hedge funds, asset management firms, and endowments, are increasingly recognizing Bitcoin’s potential as a store of value and an effective portfolio diversifier. Approximately $50B worth of Bitcoin are now held by ETFs, countries, public and private companies.
Actionable Insights
- Consider Bitcoin’s Historical Performance: Financial advisors should take into account Bitcoin’s impressive historical performance when considering it as an investment option for their clients.
- Understand Bitcoin’s Scarcity: The fixed supply of Bitcoin and the halving events that reduce the mining reward could potentially increase its value over time, making it an attractive investment.
- Explore Bitcoin as a Store of Value: Given its similarities to gold, advisors could consider Bitcoin as a potential hedge against inflation and a means to preserve wealth over the long term.
- Monitor Bitcoin’s Growing Adoption: The increasing acceptance of Bitcoin by merchants and businesses could further boost its value and make it a more mainstream investment.
- Track Institutional Interest in Bitcoin: The growing interest from institutional investors in Bitcoin could signal its potential as a store of value and portfolio diversifier.
