Why billionaires are all of a sudden accumulating Bitcoin after 113% YTD achieve

Billionaires have been more and more accumulating Bitcoin (BTC) in latest months. Following Paul Tudor Jones’ lead, hedge fund supervisor Stanley Druckenmiller turned the newest billionaire to publicly disclose his Bitcoin investment.

The efficiency of Bitcoin since 2015. Supply: TradingView.com

There are 4 most important causes Bitcoin is changing into extra compelling to high-net-worth traders. The explanations are Bitcoin’s effectiveness as a portfolio diversifier, inflation hedge, gold different and huge risk-reward potential.

Traders more and more viewing Bitcoin as “gold 2.0”

Gold is a crucial retailer of worth and a safe-haven asset for institutional traders. It serves as a hedge in opposition to inflation and as a hedge in opposition to a possible market draw back.

Traders contemplate gold as extra of a way of insurance coverage to guard a portfolio from market corrections and macro uncertainty. As such, safe-haven belongings sometimes don’t return massive beneficial properties within the quick to medium time period.

Bitcoin has the potential to realize each, as it’s evolving right into a safe-haven asset with massive growth potential.

Gold’s market capitalization is estimated to be round $9 trillion. In distinction, Bitcoin is valued at $285 billion, leaving a big hole between the 2 belongings’ valuations.

In an interview with CNBC on Nov. 9, Druckenmiller emphasized that the model of Bitcoin as a retailer of worth solely improves as time passes. He stated:

“Bitcoin may very well be an asset class that has numerous attraction as a retailer of worth to each millennials and the brand new West Coast cash — and, as , they acquired numerous it. It’s been round for 13 years and with every passing day it picks up extra of its stabilization as a model.”

Giant risk-to-reward potential

Throughout his interview, Druckenmiller famous that he owns “many many extra occasions gold” than Bitcoin. However the billionaire investor emphasised that if gold rises, Bitcoin would additionally see huge beneficial properties and “in all probability work higher.”

In comparison with gold, the dominant cryptocurrency is “thinner” and “extra illiquid,” the investor stated. Therefore, there may be bigger upside potential, even when Bitcoin composes of a smaller proportion of a portfolio than gold.