Used to be scornful or wary of digital assets, but in 2021, many billionaires realize its potential cannot be missed.
Thomas Peterffy appeared in the Wall Street Journal in 2017 warning about the dangers that Bitcoin futures can pose to capital markets. Today, the Hungarian billionaire is well-versed in cryptocurrency.
Peterffy, worth $25 billion, said it’s prudent to have 2% to 3% of one’s personal wealth in cryptocurrencies, just in case fiat currency depreciates.
He also owns some digital coins himself, while his own company – Interactive Brokers Group – recently offered clients the ability to trade Bitcoin, Ethereum, Litecoin, and Bitcoin Cash, after discovering the urgent need from them.
“It’s possible that cryptocurrencies could reap extraordinary returns, even if the opposite is also true”, Peterffy said “I think it can go to zero, and I think it can go to a million dollars.”
Peterffy’s approach highlights a shift in attitudes towards cryptocurrencies by investors who used to be scornful or wary of this type of asset. In 2021, they realize they can’t bear to miss out on the potential for big gains.
Models of Bitcoin are placed outside a cryptocurrency exchange kiosk in Istanbul, Turkey, November 8, 2021. Photo: Bloomberg
Even when the prices of digital assets fluctuate wildly, investors big and small all dived into Bitcoin and Ethereum as well as non-fungible tokens, animal-themed assets, and jokes.
Ray Dalio recently revealed he was holding some Bitcoin and Ethereum in his portfolio only months after questioning crypto’s utility as a store of wealth. The Bridgewater Associates founder views the investments as an alternative money in a world where “cash is trash’’ and inflation erodes buying power.
Paul Tudor Jones revealed that he has invested in cryptocurrencies as an inflation hedge, and that nearly half of private equity funds managed by Goldman Sachs Group are interested in adding digital currencies to their portfolios.
Cryptocurrencies are increasingly becoming an important financial trend, despite different views.
ProShares launched the first U.S. Bitcoin futures ETF, which attracted more than $1 billion in two days. Cryptocurrency enthusiasts are also hoping US regulators will approve an ETF that actually holds Bitcoin in 2022.
Coinbase Global went public and now has a market valuation of $54 billion. The company’s founder, Brian Armstrong, is worth $9.7 billion, according to the Bloomberg Billionaires Index.
It was also a period when crypto collided with culture. An NFT from Beeple sold for $69.3 million at Christie’s. Tom Brady has released NFTs tied to his career, while Katy Perry, Grimes, and the agency behind the K-Pop craze BTS have all sought to profit from this burgeoning industry.
Nayib Bukele, the President of El Salvador, even allowed Bitcoin to be legally traded in the country.
The crypto marketing race is forecast to continue into 2022 although the market is not necessarily going to continuously increase.
Michael Novogratz, who runs Galaxy Digital, said last month that prices could go “sideways to down” in the near-term. Novogratz told Bloomberg that there has been a lot of “froth” in the market in 2021, as retail investors piled into the NFT and pursued unusual cryptocurrencies. The New York-based digital evangelist also predicts Bitcoin will not drop below the floor of around $42,000.
Jesse Powell, the chief executive officer of crypto exchange Kraken, acknowledged the price could fall but said on Bloomberg TV on December 14 that any Bitcoin price below $40,000 is a “buying opportunity.”. However, this expert also admits that the prediction is not always correct. In August, he predicted the Bitcoin price would reach $100,000 a coin in 2021. Ark Investment Management’s Cathie Wood, meanwhile, still expects Bitcoin to reach $500,000.
There’s still plenty of skepticism from Wall Street and the ultra-wealthy.
Citadel’s Ken Griffin recently described the crypto rush as a “jihadist call” against the U.S dollar. But Griffin said his private firm would only trade cryptocurrencies if there was more regulation.
JPMorgan Chase’s Jamie Dimon called Bitcoin “worthless” in October, but that came even as the New York-based banking giant was bulking up hiring in this sector to help the clients trade.
