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Hedge Fund Veteran Bets $1M on Bitcoin – Says it Will Outperform S&P500

Bitcoin may hit new lows before bouncing back

For traditional investors, Bitcoin and the related cryptocurrency market has not fully been taken seriously as an option to diversify with. However, the CEO of Morgan Creek Capital says he believes Bitcoin will continue to far outperform the S&P 500 for the rest of the year and beyond.

In fact, Mark Yusko, has put a $1 million bet on this fact, putting his money where his mouth is – the only issue is that no one has taken him up on this bet.

“I was lucky. I happened to be on Melissa’s afternoon show back in December, the week Bitcoin was at $3,150 and she said, ‘What do you think’? I said look, we’ve issued the Morgan Creek Digital crypto challenge. We will take Bitcoin over the next 10 years starting on January 1st, and we’ll take anybody who wants to take the other side – a million dollar charity bet. Just like the Buffett-style bet. We’ve got no takers,” he told CNBC’s Fast Money.

Within the decade long bet, less than a year in, Bitcoin has taken an early lead as it is has grown by over 100% in this year alone, off the back of a bear market while the S&P is only up 14 percent.

“I think going forward from here, even over the next 10 years, it’s not going to be close. Bitcoin is a great diversifying asset. It has very low correlation. It should be on everybody’s portfolio,” added Yusko.

Betting on the long run

It is key that Yusko has made this a decade long bet as although Bitcoin is extremely high risk, the sentiment is starting to change that this asset will firstly, be around for a long time, and secondly, continue growing.

The S&P is supposed to be a good investment as it it a steady gainer, but there is no little doubting that Bitcoin cannot at least add to a diversified portfolio, as Yusko explained. With that in mind, and the fact that Bitcoin is prone to bouts of big volatility – both up and down – it is not inconceivable that it can outperform the S&P over 10 years.

Building on institutionalised foundations

Bitcoin is also recovering from a bubble that was based on pure speculation and FOMO when it rose to $20,000 and then fell back down towards $3,000. However, this time around, the bullish tendencies that are starting to show through have a foundation of institutionalised interest.

Banks, governments, and major companies are looking at blockchain especially, and at the same time, are looking at the power and potential of a decentralised digital currency. Bitcoin, as the leader of these currencies in terms of age, distribution and effectiveness is highly likely to be at the forefront of this ecosystem’s growth over the next 10 years.

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Survey: Two-Thirds of Global Millionaires Invested or Planning to Invest in Crypto

Cryptocurrency Millionaire Investing 2019

Despite the historic price volatility and risk associated with investing in Bitcoin and other top digital assets, high net-worth individuals around the globe appear to be in favor of cryptocurrency.

According to a new survey conducted by the Dubai-based financial consultancy firm deVere Group, 68% of the world’s millionaires are already invested in cryptocurrency or plan to do so within the next three years. The deVere Group controls more than $10 billion in assets, with a client base of over 80,000 spread across the globe.

From the survey, deVere reports that more than two-thirds of individuals with asset’s valuing greater than 1 million British pounds (GBP) (the equivalent of $1.3 million), have either invested in Bitcoin and other high-profile cryptocurrencies, or report the strong intention of doing so by the end of 2022. deVere collected responses from over 700 of its clients, ranging from the U.S. to Australia, to conclude that wealthier individuals, as a whole, are betting on the future of cryptocurrency and digital assets.

The reports is somewhat in contrast to other surveys, which have found cryptocurrency investing to be disproportionately concentrated in younger and lower net-worth individuals, with the assumption being the extremely high risk/reward proposition of digital assets is attractive to this group. Now, deVere’s newly published data gives some indication that the investment base for cryptocurrency is broadening, with high net-worth individuals more likely than not to be actively investing in digital assets.

Nigel Green, founder and CEO of deVere Group, claimed that cryptocurrency has sparked significant interest in wealthier clients,

“The research shows that wealthy individuals are increasingly seeking exposure to cryptocurrencies. There is growing, universal acceptance that cryptocurrencies are the future of money – and the future is now.  High net worth individuals are not prepared to miss out on this and are rebalancing their investment portfolios towards these digital assets.

The CEO also made the comparison between cryptocurrency and Amazon, stating that the former would do to fiat what Amazon has done to retail,

“Crypto is to money what Amazon was to retail.  Those surveyed clearly will not want to be the last one on the boat.”

Green highlighted a number of factors he found to be driving the investment interest into cryptocurrency, including Fear Of Missing Out. In addition to FOMO, Green found the borderless nature of cryptocurrency to be exceedingly attractive to high net-worth individuals, allowing them to better position themselves for the growing global economy. Having assets tailored for a digital format, such as Bitcoin, makes for a more modern form of currency that will ultimate challenge fiat.

Green also finds cryptocurrency to be better suited for overcoming real-world issues in commerce and business, stating,

“Third, they provide solutions for real-life issues, including making international remittances more efficient, and help bank the world’s estimated two billion ‘unbanked’ population.

As many other analysts have pointed out, millenial and younger investment interest in cryptocurrency could ultimately lead to a mass exodus from traditional markets to cryptocurrency, spurring substantial growth for valuation over the coming years.

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Poll: 8% of Americans Invest in Cryptocurrency

Bitcoin (BTC)–A poll released by the analytics firm Harris Insights earlier in the month has revealed that roughly 8 percent of American adults are invested in cryptocurrency. While this number pales in comparison to a similar Gallup poll figure conducted in 2016, which found about 52 percent of Americans own stock, it does show a substantial makeup of investing for the relatively young industry.

The results come from a survey first circulated in June 2018, in conjunction with the cryptocurrency app Gem. In addition to finding 8 percent of adults currently invested in cryptocurrency, a large response to digital assets was negative, with 41 percent of the 2,000 polled stating they were not invested in crypto and nothing could motivate them to change their mind into doing so. Similar to previous reported findings, the largest reason for the lack of interest in cryptocurrency was price volatility and belief that the current market is still in a ‘Wild West’ phase, two risky features that make the form of investment less appealing to older generations. However, the poll did find that younger investors and those with less overall capital were much more willing to participate in the risky market, with Gem’s founder and CEO Micah Winkelspecht saying,

“We find that younger people with less income are more willing to put money in crypto,. My guess is that crypto is of the digital age. And the younger generation is of the digital age and used to doing everything on the internet.”

One of the more surprising results from the survey was the reluctance of polled adults, of any age, earning over $100,000 annually to invest in cryptocurrency, with the percentage of crypto investors increasing with decreased yearly income. In addition to cryptocurrencies being more in vogue with younger generations, Winkelspecht also posits that the upside of crypto investing outweighs the risk of loss and volatility to younger adults with less overall capital. He also admits that the trend of less wealthy investors putting money into cryptocurrency could be an effort to ‘get rich quick,’ ignoring the significant risks posed by the market in an effort to cash in on the regular double-digit swings of the industry.

“The cryptocurrency space is still in its Wild West phase, so there’s potentially some of that going on. When you have less to protect, you are more willing to take the risk.”

As Fortune points out, the survey was conducted in the middle of an extremely bearish year for cryptocurrency, with Bitcoin falling from an all time high last December of near $20,000 to below $7000, making the investment appear far more volatile with less enticing upside than if the same survey was conducted during last year’s bullish fourth quarter. Rather than continuing to build excitement for blockchain, Bitcoin and crypto adoption, most of the conversation surrounding the industry in 2018 has shifted to increased regulation and the possibility of a Bitcoin-based Exchange-Traded fund.  

Despite only 8 percent of polled investors currently participating in cryptocurrency, the survey found that 50 percent of American adults are interested in trying out the asset class in the future, similar to a finding reported earlier in the month that cryptocurrency will make up 5 percent of all investments in 2019. With the SEC still planning to weigh in on the debate over Bitcoin ETFs, it is possible that the market will continue to grow exponentially in response to increased regulation enticing institutional investors.

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