Bitcoin is Back

In 2017 Bitcoin surged from under 1000 a coin to almost 20,000 by the end of that year. Many new investors began jumping in not wanting to miss out. Along the way many prominent old school investors such as Warren Buffet ridiculed the crypto currency calling it “worthless”. JPMorgan

CEO Jaime Dimon viewed it as a bubble, “worse than tulip bulbs.” By the end of 2018, Bitcoin fell to under 3500 per coin. However, Bitcoin has been making another run. Since March it has more than tripled and it has recently traded over 19000. This time however the runup feels a little bit different as it is no longer being fueled primarily by millennial retail investors. Major financial institutions are finally getting on board. BlackRock’s fixed income

CIO Rick Rieder, who recently appeared on CNBC stated, “I think cryptocurrency is here to stay.” In May hedge fund legend Paul Tudor Jones called it a “great speculation.” In the second quarter of 2020, more than a dozen prominent Wall Street firms disclosed through SEC filings that they had invested in crypto currencies through Grayscale Bitcoin Trust (GBTC). Goldman Sachs created a digital asset department and JPMorgan now permits customers to transfer in and out of crypto exchange sites. Bitcoin and other cryptocurrencies surged when PayPal announced in October that it will soon allow buying, holding and trading of cryptocurrencies including Bitcoin. Easy access to bitcoin purchases could cause demand to explode. Some investors see Bitcoin as an inflation hedge. Unlike gold which is constantly being mined, there is a finite amount of Bitcoin which is capped at 21 million coins. According to ARK Investment CEO Cathie Wood which manages four of this year’s best performing ETF’s, because of the limited supply, if institutions raise their stake in bitcoin, it could take the price to 500,000. That being said, crypto currency like Bitcoin has no intrinsic value. Like gold, it is only worth what other people are willing to pay for it. Source: Yahoo Finance Bitcoin is difficult to value, volatile and speculative. Investing involves risk. There is always the potential to lose money when you invest in securities. Past performance does not guarantee future results.