When asking investment professionals about their decision not to invest in Bitcoin, a consistent response emerges. They express a reluctance to purchase something they do not fully comprehend. The hesitation stems from a perceived lack of understanding regarding Bitcoin as it lacks a determinable fundamental value. They find it challenging to elucidate the reasons behind the cryptocurrency’s price fluctuations, attributing them mainly to speculative investment flows.
Elsewhere, the approval of the Bitcoin ETF by the SEC, while widely expected, is indeed excellent news. According to my partner, these 11 US ETFs can now join Bitcoin ETFs in Canada, Germany, Brazil and Australia, as well as Jersey, Switzerland, Liechtenstein and Guernsey.
To brighten up my day, a client shared with me an interesting article from VanEck and it makes for a good read especially for those with an open mind in a world usually dominated by doom and gloom.
Here is a section:
In its early years, bitcoin was largely used by a small group of tech enthusiasts. It was difficult and cumbersome to obtain with limited use cases and very few merchants accepting it as a form of payment. In 2023, bitcoin adoption has grown substantially as it has become more mainstream.
Now, more than ever, merchants and businesses are accepting bitcoin as a form of payment and infrastructure has been built to make it more convenient for the average person to use. The development of user-friendly wallets, exchanges, and marketplaces has removed the technical barriers to entry that existed in bitcoin’s early years.
Bitcoin interest among institutional investors has also increased. Hedge funds, asset management firms, and endowments are increasingly recognizing bitcoin’s potential as a store of value and as an effective portfolio diversifier, specifically, when looking through the lens of an uncorrelated asset that has the potential to hedge against inflation. Approximately $50 billion worth of bitcoin are now held by ETFs, countries, public and private companies.

If bitcoin is increasingly used as an asset with monetary value, what role might it play? Bitcoin may potentially increase portfolio diversification because of its low correlation to traditional asset classes. Bitcoin correlation with Nasdaq has fallen considerably.

Bitcoin may also enhance risk-return profiles. A small allocation to Bitcoin significantly enhanced the cumulative return of a traditional 60% equity and 40% bond mix while only minimally impacting overall volatility.
