A major investment firm, Bitwise Asset Management, believes now is the best time ever to buy Bitcoin. Their recent investor memo, “The Great Derisking of Bitcoin,” makes a strong case for this bold claim.
Bitcoin’s Journey: From Risky Gamble to Credible Asset
Chief Investment Officer Matt Hougan’s memo details Bitcoin’s evolution. He recalls when Bitcoin first hit $1 in 2011, highlighting the immense risks involved back then. Sending money to a “random PayPal address” via a new, untested exchange was a huge gamble. Custody, regulation, and government oversight were practically nonexistent.
However, Hougan argues that Bitcoin has successfully overcome nearly every early threat. Improved trading platforms and custodial solutions made it easier to buy and hold. The launch of Coinbase in 2011 was a turning point, making Bitcoin more accessible. Major players like Fidelity also entered the crypto space, boosting trust and security. Plus, regulatory fears have significantly decreased, especially with the introduction of Bitcoin ETFs in 2024. This broader acceptance by traditional finance made it easier for institutions to invest.
The Last Hurdle Cleared: Government Endorsement
One major lingering concern was government intervention – a potential ban. Hougan drew a parallel to the US government’s gold confiscation in 1933. The fear was that Bitcoin could suffer a similar fate if it grew too large.
But, earlier this year, President Trump’s executive order establishing a US Strategic Bitcoin Reserve seemingly eliminated this risk. This government investment essentially removed the possibility of a ban, shifting to a policy of strategic engagement.
This move has raised questions. Why would the US government support a potential competitor to the dollar? Hougan argues that the US sees Bitcoin as a hedge against risks to the dollar’s dominance. If the dollar’s position weakens, Bitcoin offers a more transparent alternative than, say, the Chinese yuan.
Institutional Investors are Taking Notice
Bitwise has seen a significant shift in institutional investment strategies. Two years ago, a 1% Bitcoin allocation was considered aggressive. Now, with increased legitimacy and regulation, they’re seeing clients adopt allocations closer to 3%, and the trend is expected to continue rising. Bitcoin is no longer just a speculative gamble; it’s becoming a mainstream asset.
At the time of writing, Bitcoin was trading at $87,865.
