What Happens When All the Millionaires Buy Bitcoin?

Wind the clock back to 1992.

The Maastricht Treaty had just been signed formalising the creation and greater integration of the European Union.

George Bush Snr, Bill Clinton and Ross Perot were set to run in the US Presidential election. Bush was the incumbent, had led the US through the Gulf War and was about to be dethroned by the young, charismatic Clinton.

Paul Keating had only just got into office in late 1991 off the back of the worst recession since The Great Depression. By 1992, growth was starting to return to the Aussie economy and would be the beginning of a record period of economic prosperity.

1992 was also the year Miley Cyrus would be born. 27 years later she’d be a headliner at Glastonbury. Disney’s Aladdin was released in the cinema along with other great films such as The Bodyguard, Sister Act, Basic Instinct, Reservoir Dogs and…The Mighty Ducks.

Yep, The Mighty Ducks. That great Disney classic about a junior ice hockey team that overcomes adversity to become champions; a true ‘Cinderella story’.

Now for me, a then nine-year-old, The Mighty Ducks was right up my alley. It was for most nine-year-olds. Disney even went on to start the professional team The Mighty Ducks of Anaheim after the success of the movie. That says it all when it comes to the influence of film on pop culture.

But what we didn’t realise back then was that one of the actors in The Mighty Ducks would go on to create his own piece of history 27 years later.

Except it would have nothing to do with the movie. Rather, it was a $1.2 million deal in the heart of Amsterdam, based on possibly the most controversial substance on Earth.

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Controversy everywhere you look

Brock Pierce played Gordon Bombay in The Mighty Ducks and the sequel, D2: The Mighty Ducks in 1994. He would then go on to a high degree of controversy in the late 90s. Pierce was one of the original founders of Digital Entertainment Network (DEN) — a digital content streaming site. This was years before the likes of YouTube and Netflix were even a thought.

DEN brought in millions in VC money. But they would eventually burn through it all and collapse.

Pierce and other DEN founders Marc Collins-Rector and Chad Shackley became embroiled in sexual assault lawsuits. The claims included, ‘…systematically raped and drugged [the claimant], even threatening him with a gun’.

Charges would eventually be dropped against Pierce and he would move on from Collins-Rector and Shackley — to something rather significant.

In 2013, Pierce helped launch Blockchain Capital. This would eventually become Block.One. And this was the launch vehicle for the EOS blockchain and token sale.

Pierce was an early adviser to EOS. But thanks to controversy from TV personality John Oliver, Pierce left the project.

We know that in November 2018, Pierce used the services of Nexo — a crypto lending business. Nexo extended the first ever crypto-backed mortgage, which enabled him to buy a $1.2 million house in Amsterdam.

What’s interesting is that Fox Business reports in order to get this mortgage, Pierce had to put down $3 million in BTC as collateral. Now, based on average November BTC prices (around US$5,500), that means Pierce needed around 545 BTC to get this deal done.

It’s also fair to assume that this wouldn’t be the entirety of Pierce’s bitcoin holdings. In fact, we’d bet he’s got a few hundred more (at least) tucked away for that rainy day.

Pierce has always clearly been around money, and he’s been involved in bitcoin and crypto for some time now. But our bet is you’ve never heard of him until now.

Pierce is a representative of hundreds of thousands — maybe even millions — of wealthy people who are holding and hoarding bitcoin. People that you’ve never heard of and will potentially never know about.

We bet you’ve also never heard of Matt Barkley, either?

Barkley is a quarterback for the Buffalo Bills NFL team. Before this, he’d played for the San Francisco 49ers and the Cincinnati Bengals. In December 2018, he signed a two-year contract extension with the Bills, worth about US$3.5 million, plus another US$1.5 million in bonuses.

What’s interesting about this is that according to reports, Barkley tried to get prior contracts and his recent one paid in bitcoin. None of the teams played ball, but this isn’t likely an isolated situation.

We’d be pretty comfortable assuming Barkley has a fair stash of BTC tucked away. He’s not short on a dollar, after all.

According to CNBC:

…the average NFL salary was only about $2.7 million in 2017, according to The L.A. Times. That’s less than three-quarters of the average $4 million earnings of a major league baseball player and less than half the typical wage of NBA players, who earn about $7.1 million on average.

Now, if you’re a sports person who’s making millions per year, likes a bit of risk, can’t bet on certain sports and is looking to put some money into something speculative…where do you think they’re going to look?

There are around 1,696 active NFL players each season. There are around 450 active NBA players each year. And there are around 750 active MLB players every year.

Let’s make it simple — that’s thousands of millionaires with some cash to burn. And our bet is that a lot of them — certainly not all of them — likely have dabbled into crypto already. And more than likely into bitcoin.

You want to talk about demand and supply?

I’m going to make this pretty blunt right now. There are people out there right now that are much richer than you. People like those thousands of players that are in those huge US-based sports leagues. And we haven’t even started on the wealth and money flowing around Europe’s football leagues.

While we mentioned Pierce earlier, he’s one of the more obscure names to come out of Hollywood. Think about all the wealth flowing around movie studios, actors, producers and directors…

These multimillionaires are the exact kind of people that are likely buying up or already hold bitcoin. In some cases like Pierce, they probably hold hundreds of bitcoin.

There’s a reason for rubbing your face in the obscene wealth of these high profile athletes and celebrities. They’re the reason why it’s going to get exponentially harder in the future to buy and own whole bitcoin.

We know there will only ever be 21 million bitcoin. We also know a couple of million are forever inaccessible. That means 7.5 billion people on Earth have to split around 17 or 18 million bitcoin amongst themselves.

And if the world’s wealthy are already moving into this space, gathering up and hoarding their own bitcoin? What do you think that’s going to do to the supply?

It’ll tighten even further, that’s what.

We’ll hit a critical point when the wider world starts to get involved and demand bitcoin. That’s only going to make it exponentially harder in the future to get and hold one.

And when you have constricting supply of a hotly-in-demand asset, it typically drives prices higher, fast.

What does that leave for the average investor, then? Well honestly, not much. And that’s why, in our view, you should be looking to get your stake in crypto markets now while you can, before it’s too late.

You need to be looking at what you can afford. Look at what you can risk. And importantly, look what else exists beyond bitcoin.

But above all else, if you’re not yet adding crypto to your portfolio, the longer you wait, the harder it will be.


Sam Volkering,
Editor, Money Morning

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Sam Volkering is an Editor for Money Morning and is small-cap, cryptocurrency and technology expert.

He’s not interested in boring blue chip stocks. He’s after explosive investments; companies whose shares trade for cents on the dollar, cryptocurrencies that can deliver life-changing returns. He looks for the ‘edge of the bell curve’ opportunities that are often shunned by those in the financial services industry.

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