- >Here Comes the Next Wave of Ultra-Wealthy Bitcoin Investors
Here Comes the Next Wave of Ultra-Wealthy Bitcoin Investors
What date do we point as the start of the 2020 Bitcoin bull run? Is it March 12, 2020 when Bitcoin dropped 50% only to rebound within a month? Maybe it is when MicroStrategy, a publicly traded company announced their allegiance to the Bitcoin Standard. The news of Kraken becoming the first regulated crypto bank in America certainly improves the prospects of adoption. Regardless of the date, it is easy to tell that we’re firmly inside yet another Bitcoin bull run. The sentiments of long term bitcoin hodlers is that this wave seems different than any that comes before. Starting with Mexico’s third richest individual, let’s dive into why this next wave of bitcoin adoption is just getting started.
Keegan Francis | Nov 20, 2020
Mexico’s Third Richest Individual Invests 10% Into Bitcoin
The world found out about Ricardo Salinas Pliego’s bitcoin holdings on November 18, 2020. It was revealed that he has 10% of his liquid holdings in bitcoin. The first thing that is striking about this revelation is that a total of ZERO other cryptocurrencies are mentioned. This doesn’t mean that he isn’t holding other cryptocurrencies, it means that he isn’t being public about it if he is. Regardless, this fact is extremely bullish for bitcoin, and bearish for everything else.
We’re at the point where billionaires are comfortable announcing that they’re holding bitcoin. Just a reminder, ten years ago, Bitcoin was a niche internet fad used for purchasing drugs on the internet. Now it is an international investment instrument for hedging against inflation, and safeguarding wealth amidst growing capital controls.
Numbers (Dollars) in Perspective
Putting numbers in perspective, Pilego’s net worth (according to wikipedia) is in the neighbourhood of $13 billion dollars. If we are conservative with our estimates, we may say that 10% of his liquid holdings is somewhere between $50 and $200 million dollars.
What we’re seeing around the world, is the start of a mega wave of investments of this size heading straight for Bitcoin. This claim is not without its grounds, MicroStrategy has invested $425 million into bitcoin between August and October. Square followed suit with their own $50 million dollar investment. It was later revealed that Michael Saylor had invested $175 million of his own funds into bitcoin.
Recalling Bitcoin’s Path to Adoption
Up until now, Bitcoin’s rise in market cap was almost entirely attributed to the retail investor. We are able to take a step back and classify waves of adoption. This will help us make predictions as to what will characterize future waves, and what price bitcoin will hold at this time.
The First Wave: Discovery
Bitcoin got its start practically by accident. It was a series of happenstantial events that led to its initial price discovery of pennies per bitcoin. From bitcoin pizza day, to Wikileaks accepting bitcoin for donations in order to avoid censorship.
Yes, bitcoin first achieved a market fit, by appealing to those who needed it, followed by those who were curious. At this level virtually no one was buying millions of dollars worth of bitcoin. That’s because there weren’t that many bitcoin in existence (on the market), and who would throw millions into a weird niche internet money?
The Second Wave: The Great Leap
Bitcoin went through a great leap in adoption as the range of interested individuals expanded beyond the niche. Mega proponents of the technology such as Andreas Antonopolous and Roger Ver evangelized Bitcoin by articulating its true potential. This act galvanized the technology and allowed it to be seen as a great hope for the future of money.
The great leap for Bitcoin is when startups like Kraken and Coinbase successfully establish themselves despite an onslaught of ridicule. During this time, Bitcoin achieved prices above $1000 before retreating into another phase of recollection.
The Third Wave: The FOMO-Induced Bubble
One great thing about Bitcoin is its ability to build upon what it has already achieved. If you look at the yearly lows for bitcoin, then a pattern emerges. Bitcoin consistently breaks its previous all time low, rarely returning to the level it sunk to before. The Bitcoin bubble occurred throughout the year of 2017, starting at $1000 in January, and ending at $20k in December. By the end of the bubble, stories of individuals achieving untold riches have reached the far corners of the globe.
Most people now know the term bitcoin, but know very little about it. Companies like Coinbase have refined their user experience to the level that investing in bitcoin is simple for even the least tech savvy among us. These factors led bitcoin to attain widespread, unparalleled brand recognition. A pillar on which Bitcoin will use to launch itself into its fourth wave.
The Fourth Wave: Bitcoin’s Primary Use Case Emerges
During the years between 2017 and 2020 the world saw the collapse of several world currencies. Countries such as Venezuela, Argentina, and Zimbabwe all went through inflation events that rendered their national currencies worthless. Since money is the lubricant of exchange, people naturally look for alternative currencies in light of their dried up FIAT money. People from all different technical backgrounds started adopting bitcoin as their primary means of exchanging value. As volatile as bitcoin is, it is nowhere near as volatile as a currency that is undergoing hyperinflation.
The risk of systemic hyperinflation is now being globally recognized by ever increasingly wealthy individuals and companies. The thing that catches the attention of billionaires is the threat of losing the purchasing power of their wealth. The only thing that could decimate the wealth of a billionaire faster than anything else, is an inflation event. Bitcoin is extremely appealing as a protection against this for several reasons. Two prime reasons are its lack of central minting / printing authority, and the absolutely finite supply of 21 million coins. Bitcoin’s primary use case, which it is proving with each passing day, is that it is the most effective hedge against inflation caused by centralized money printing.
Here Comes Bitcoin’s Fourth Wave
Macro Economic Analyst Raoul Pal states it better than anyone else:
“There is a enormous wall of money headed for Bitcoin” — Raoul Pal
The world markets are shifting, and people are actively looking for opportunities. Not only that, there is more cash in circulation than ever before in history. The fourth wave is hyper rich individuals, and businesses that are looking to preserve the purchasing power of their wealth. Bitcoin has captured the attention of these individuals, and is completely ready to incorporate billions of dollars into its market cap. The next decade on this planet, may very well be characterized by those who bought bitcoin, and those who did not.