Top Wall Street Advisor: Every Firm Should Consider Investing in Bitcoin
Ric Edelman, a top Wall Street advisor and the chairman of Edelman Financial Services, LLC, said in an interview with CNBC’s Fast Money that every financial advisor and investment firm should consider allocating capital to Bitcoin.
In two months, Bitcoin officially becomes 10 years old. Within a relatively short period of time, the valuation of Bitcoin went from zero to $112 billion, enabling a market that is valued at $216 billion with a daily trading volume of $13 billion.
Zero to a $112 Billion Consensus Currency
In its research, Tabb Group discovered that the over-the-counter (OTC) market records around two to three-fold larger daily trading volume in comparison to the cryptocurrency exchange market. In total, the daily trading volume of the entire crypto market is estimated to be around $40 billion.
Given the improvement of market infrastructure, the liquidity of cryptocurrencies, and the acknowledgment of digital assets as an emerging asset class, Edelman firmly stated that every investor should invest in Bitcoin.
“I’m bullish on it because Bitcoin is now ten years old, it is a $200 billion market and Bitcoin is about 40 percent of that. Clearly, it is here to stay. There is a massive amount of investment going into the blockchain and crypto assets, and financial advisors really don’t know much about it, no more than their clients do.”
Edelman echoed the sentiment of Yale economist Aleh Tsyvinski, a macroeconomics professor at the prestigious Yale University, who stated that any investor that even slightly believes Bitcoin will demonstrate a similar price movement it recorded in previous years should invest 1 to 6 percent of a portfolio in the dominant cryptocurrency.
Tsyvinski said, in an interview with Yale Ph.D. candidate Yukun Liu:
“If you as an investor believe that Bitcoin will perform as well as it has historically, then you should hold 6% of your portfolio in Bitcoin. If you believe that it will do half as well, you should hold 4%. In all other circumstances, if you think it will do much worse, then you should still hold 1%.”
In the months to come, Edelman stated that he will assist financial advisors and encourage investment firms in the traditional finance sector to conduct research into the cryptocurrency market so that clients can gain proper knowledge on the asset class and form reliable investment thesis.
Edelman emphasized that cryptocurrencies have already evolved into an established asset class and they have demonstrated features of a robust store of value like gold and other types of precious metals.
But, despite the rapid growth of the market in terms of volume, infrastructure, user base, awareness, and adoption, he explained that there is “virtually no federal regulation” in the space, which has led investors to be reluctant towards acknowledging the cryptocurrency market as a legitimate industry.
Bitcoin ETF Will Change Everything
Currently, Edelman stated that it is of great risk for clients to invest in the cryptocurrency market due to the lack of infrastructure for retail traders. Coinbase, BitGo, Goldman Sachs, and other leading financial institutions have focused on the development of trusted custodian solutions to service institutional investors.
For retail traders or individual investors, apart from cryptocurrency exchanges, which require specific know-how and knowledge as SEC Commissioner Hester Peirce said, there isn’t a practical and secure way of investing in the market.
Once the US Securities and Exchange Commission (SEC) approves the first Bitcoin exchange-traded fund (ETF), Edelman said that the cryptocurrency market will see an unprecedented influx of capital from the traditional finance sector.