Van Eck The Investment Case for Bitcoin

[fillippone]

Van Eck released a very interesting PowerPoint presentation detailing their version of the

The Investment Case for Bitcoin

It's a nice presentation detailing why an institutional investor should be interested in adding Bitcoin to their portfolio.

If you are a regular reader of this forum it isn't anything particularly new, but it is really interesting what and why you should communicate to an institutional investor to get him onboard.

This is the agenda of the presentation

Bitcoin as a Potential Store of Value 3
Bitcoin’s Role in an Investment Portfolio 9
Accelerating Bitcoin Adoption 18

	The usual argument: low correlation coupled with high volatility....	....leads to improved portfolio returns (Higher Yield/Same Volatility or SameYeld/Less volatility)

Something new: you have to warn your clients about all the risks in the investment you are proposing:

	Investing in Bitcoin exposes you to a wide array of risks part from price.

As my "research" interest is the merging of Bitcoin and financial industry I found this presentation quite interesting: I can figure out a CME representative trying to sell their Bitcoin products to a wide array of potential customers.

If you liked this "investment thesis" format, please be aware there Is a wide array of presentations on this topic, at Lopp website:

BITCOIN INVESTMENT THESES

Due to the complexity of the financial system and the variety of use cases for Bitcoin, there are a variety of perspectives for why investing in BTC may be a prudent decision.

Every presentation is titled according to the peculiar aspect(s) the author of the presentation wanted more emphasised.

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[Poker Player]

This is good news for us, as it is another step in the normalization of bitcoin, and even more so for institutional investors, who are behind the recent rise in bitcoin prices and the recent new ATH. As Michael Saylor said, when the FOMO enters the institutional investors' minds, the price can go to the moon, and we haven't stopped seeing news lately that point in this direction.

Then there is another thing, the more standardized the use of bitcoin is among institutional investors, the more it will help adoption among the general public.

[davis196]

This analysis tells nothing new to the average Bitcoin/crypto enthusiast,but it can help for raising awareness across the institutional investors about the pros and cons of the evolving cryptocurrency industry.

As Michael Saylor said, when the FOMO enters the institutional investors' minds, the price can go to the moon, and we haven't stopped seeing news lately that point in this direction.

I kinda disagree with Michael Saylor.FOMO is more of an emotional factor and institutional investors can't act emotionally like the ordinary crypto traders.All the large institutional investors usually have big teams of analysts,so every decision they make is based on logic and facts and not on emotions like fear-of-missing-out(FOMO).

[Wind_FURY]

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"Government shortcomings"? Probably because of the scaling debate? I would like to believe that the Bitcoin community was successful in beating the actors in the network who had their own agenda to control the network, and fork Bitcoin away from the Core developers.

[justdimin]

I am not really sure about creating a bitcoin product because it puts layers on top of bitcoin. Many companies have done it, they create this new product, call it "mycompanybitcoin" and whatever company that is change the name there, and they just sell THAT instead of bitcoin right? So, their customers give money to them in order to invest into bitcoin, by logic if bitcoin goes up that should go up as well and if bitcoin goes down it should go down as well.

However things are not like that directly, let's assume there is a whale, and bitcoin price went up a lot right? They could simply sell all of their investment and drop it when it should be going up. I just do not like layers on top of bitcoin, if anyone wants to invest into bitcoin just do it right away, put all your money into bitcoin, be a broker for people who would like to buy as well if you want to, take a commission, but do not create something new pegged to bitcoin price, that doesn't sound healthy.

[fillippone]

"Government shortcomings"? Probably because of the scaling debate? I would like to believe that the Bitcoin community was successful in beating the actors in the network who had their own agenda to control the network, and fork Bitcoin away from the Core developers.

Yes, I guess they are referring to a similar scenario. I think the bitcoin community has learned, the hard way, the lesson, and for other less controversial updates (Schnorr/Taproot activation for example) they are proceeding with extreme caution.
It is still a risk, and if you have an intellectual honesty, you still have to include in the risks of the investment in Bitcoin.

[dothebeats]

The warnings are fair, and IMO, should be considered before blowing lots of money in bitcoin. We know Van Eck has been quite bullish on bitcoin for some time now, but it's good that it still isn't highly-biased just to make a point. Just pure data publicly available, presented in a way that is easier to understand than your average investment proposals from seasoned investors (not to shit on them or anything). At least, they are trying to get people into bitcoin with actual reason and not just instilling FOMO because bitcoin reached price X in time Y, that asset X1 never did.

[Oshosondy]

It will be good if more institutions join in investing in bitcoin, it will be good very well and can be the main reason bitcoin will increase more in price like it did from $10000 to the price above $23000 now. While bitcoin will have more or increasing marketcap, also the price will increase while also the institutions will later have their gain if they continue to invest, this will only later lead to fomo which is normal investors that will also drive the price higher.

All what is said about bitcoin are true, it is just store of value that is not similar to fiat or stocks but bitcoin has its own unique characteristics that makes it superior.

[exstasie]

I kinda disagree with Michael Saylor.FOMO is more of an emotional factor and institutional investors can't act emotionally like the ordinary crypto traders.All the large institutional investors usually have big teams of analysts,so every decision they make is based on logic and facts and not on emotions like fear-of-missing-out(FOMO).

Institutional investment is heavily performance driven. They may employ a higher level of analysis than retail investors, but their whole business is essentially chasing performance to outperform benchmarks and other funds. They get FOMO and chase price too; they just tend to do it earlier in the market cycle than retail.

He's right. When other funds start disclosing massive gains in crypto, laggard investment funds are going to get FOMO. They won't have much choice if they want to stay competitive.

[fillippone]

He's right. When other funds start disclosing massive gains in crypto, laggard investment funds are going to get FOMO. They won't have much choice if they want to stay competitive.

I think Micheal Saylor opened the eyes to every CFO and every fund manager in the world. Now bitcoin is a viable investment option for every institutional investor, be it investment fund, trust, investment vehicle or even privately held firm.

Every legal, fiscal or auditing/compliance hurdle has been settled, Microstrategy demonstrated.
 
So now staying out of bitcoin investment is a deliberate choice of every investor, a choice they are accountable for.

[NeuroticFish]

So now staying out of bitcoin investment is a deliberate choice of every investor, a choice they are accountable for.

I still think that's somewhat early for institutional investors. What I mean is that your statement will start becoming more and more powerful by the time.
Right now the Bitcoin investors are still few. In the next market cycle they'll have no excuse at all for staying away.

I'm also curious how the institutions will handle next crypto winter (if we'll still have one).

[fiulpro]

So now staying out of bitcoin investment is a deliberate choice of every investor, a choice they are accountable for.

I still think that's somewhat early for institutional investors. What I mean is that your statement will start becoming more and more powerful by the time.
Right now the Bitcoin investors are still few. In the next market cycle they'll have no excuse at all for staying away.

I'm also curious how the institutions will handle next crypto winter (if we'll still have one).

I do think that it's not really early since now a days we have seen a lot of news regarding the institutions investing in bitcoins and other cryptocurrencies.
Gray Scale, coin shares , microstrategy, GiQ, Galaxy digital holdings all are nothing but good companies. You have to understand the fact that we are not in 2009 anymore and I do believe that bitcoins is now bigger than ever and due to all time high we have succeed in reaching a better place and people even have inbuilt trust in bitcoins now.

As far as investors are concerned I do think that the reason why we have less investors in the list is because they don't try and make their investments public. That's a really big problem. They might be getting benefited by bitcoins but they won't go public regarding their investments.

https://www.forbes.com/sites/michaeldelcastillo/2020/08/06/valuable-sec-data-on-20-institutional-bitcoin-investors-could-soon-disappear/?sh=552848dd1de2

You can see the list here.

There are even a lot more but it will take a lot of time to get their names in the list ofc.

Plus it always makes me happy to see such posts where people try and encourage bitcoins and their adoption.

[jaysabi]

This is good news for us, as it is another step in the normalization of bitcoin, and even more so for institutional investors, who are behind the recent rise in bitcoin prices and the recent new ATH. As Michael Saylor said, when the FOMO enters the institutional investors' minds, the price can go to the moon, and we haven't stopped seeing news lately that point in this direction.

Then there is another thing, the more standardized the use of bitcoin is among institutional investors, the more it will help adoption among the general public.

Institutional investors aren’t prone to FOMO like retail investors because retail investors are generally (and literally in the eyes of the law) “unsophisticated.”  I think it wrong to say it doesn’t exist at all, but expecting FOMO to guide institutional investors actions to a large degree (and especially anywhere near the extent it drives the average person on these boards) is great folly.

[exstasie]

So now staying out of bitcoin investment is a deliberate choice of every investor, a choice they are accountable for.

I still think that's somewhat early for institutional investors.

There's a wide spectrum of institutions, ranging from high risk to conservative/blue chip. We've seen hedge funds from the former group entering since 2014. We've yet to see conservative institutions like pension funds or sovereign wealth funds enter the fray, but I believe we will in the coming years, especially after institutional custodians and instruments like ETFs become better established.

So yes, it's still quite early. The more prominent institutions who have dipped their toes in (with the exception of Microstrategy) are only doing so with a very small % of their overall capital allocation. And the biggest institutions of all haven't dipped their toes in at all.

[fillippone]

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So yes, it's still quite early. The more prominent institutions who have dipped their toes in (with the exception of Microstrategy) are only doing so with a very small % of their overall capital allocation. And the biggest institutions of all haven't dipped their toes in at all.

I think the major hurdles for an institution to get long bitcoin were difficulties on a legal/fiscal/ compliance perspective. And the closer to a financial institution, the harder those to overcome.

In a sense then, MicroStrategy was in a favourable position  (until they got too long and to much closely resembling an ETF, which may piss out SEC regulators) to show the way to others.

Now it appears that a setup exists for everyone to get long bitcoin, even for the most regulated, risk adverse institution.

[jaysabi]

In a sense then, MicroStrategy was in a favourable position  (until they got too long and to much closely resembling an ETF, which may piss out SEC regulators) to show the way to others.

I think the SEC will be overstepping bounds if they get involved on account of this. Microstrategy is making the required filings, isn't holding itself out as an ETF, isn't trying to be an ETF... I just don't see the basis for the SEC to get further involved.  Also, the SEC has been pretty cautious about over regulating crypto, so I don't think they're particularly likely to insert themselves into the situation at this time.

[ReiMomo]

If we're talking about diversifying an investment portfolio, then Bitcoin should be one of the best options.

The fact that Bitcoin is giving good results during the previous years really is something to consider.
Michael Saylor does have a reputation in finance already, that's why people and even institutions will trust what he envisions. That is basically it in my own opinion.

[amishmanish]

I hope that the really huge, mainstream institutions don't jump into the fray. Once they get in, what is the utility aspect that remains for bitcoin to continue to grow upon?? Bitcoin hasn't realized any of its potential till now. It is not yet established as a transactions alternative due to scaling issues. There hasn't been enough open source products based on bitcoin that have gained huge user bases.

The single use case that is being touted is Digital Gold. I don't think thats enough or irreplacable if institutions takeover in a big way.

[exstasie]

I hope that the really huge, mainstream institutions don't jump into the fray. Once they get in, what is the utility aspect that remains for bitcoin to continue to grow upon?? Bitcoin hasn't realized any of its potential till now. It is not yet established as a transactions alternative due to scaling issues. There hasn't been enough open source products based on bitcoin that have gained huge user bases.

The single use case that is being touted is Digital Gold. I don't think thats enough or irreplacable if institutions takeover in a big way.

The market is pricing in future utility, future adoption. Just like it's now pricing in fiat devaluation by buying up hard assets and risk assets, long before real inflation sets in.

Speculators gonna speculate.

Doesn't mean Layer 2 scaling solutions (Lightning, Liquid, RSK, etc.) won't get better, or won't be adopted. It's just that investors have a way of front running high growth investments, before they fully materialize.

Bitcoin is still in beta, as they say.

[darewaller]

It's great that you end up checking out what wall street and the likes are doing and experimenting with their business, I rarely hear about what they are planning to do, and only get to hear what they do after they do it. To see that more and more companies are interested in crypto makes me hopeful about our future, it means that we are going to keep going higher and higher in price of bitcoin because there will be more and more money invested into crypto as well. Obviously this is not going to be today or tomorrow, but it shows the future of bitcoin is bright with all these huge companies getting ready to invest into crypto.

It is especially important during this period because we are already quite high, nearly at $28k levels which means we need a lot more money put into crypto in order to make it go higher, without those big whales we can't do it all by ourselves.