Bitcoin and the wider crypto ecosystem are the very antithesis of the legacy system. And I don’t just mean the legacy financial system. I mean all centralised, controlled, siloed, manipulated, profit-driven networks controlled by the few.
That’s communications networks, social networks, content and media networks, data and information networks. Any kind of network that has a concentrated, centralised point of control, and hence point of failure, is set to be upended by crypto networks.
But for many of these incumbents with their legacy systems, they’ve not seen the writing on the wall. And it’s going to catch them with their pants down.
There are some that seem to have fallen on their swords in recent times. And none bigger than the powers that be at the US$260 billion bank and asset manager, JPMorgan Chase & Co [NYSE:JPM].
One billionaire, two billionaires…all the billionaires
Let’s throw back to September 2017…
Crypto markets were just starting to fire up, seeing fast and large rises in their values. The excitement in the market was palpable. And the mainstream was just starting to get wind of this wild new technology revolution playing out.
Of course, in 2017 the traditional legacy types were quite dismissive of crypto. Those of us in the know could see what was developing. And we knew how the legacy system would react to it.
And they didn’t disappoint.
According to an article from 12 September 2017 in Bloomberg:
‘JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said he would fire any employee trading bitcoin for being “stupid.”
‘The cryptocurrency “won’t end well,” he told an investor conference in New York on Tuesday, predicting it will eventually blow up. “It’s a fraud” and “worse than tulip bulbs.”
‘If a JPMorgan trader began trading in bitcoin, he said, “I’d fire them in a second. For two reasons: It’s against our rules, and they’re stupid. And both are dangerous.”’
Some pretty stern words from Dimon. He’s been a vocal critic of bitcoin and crypto for years now. He is, of course, not alone.
But let’s have a look at the stance JPMorgan takes today…
Again, according to Bloomberg:
‘JPMorgan Chase & Co. agreed to take on two Bitcoin exchanges as banking clients in a move that shows the company getting more comfortable with an industry its top leader once spurned.
‘The firm added Coinbase Inc. and Gemini Trust Co. as banking customers in its corporate and investment bank in April.’
While that’s not JPMorgan directly getting into bitcoin, it’s a still a significant change of policy from just a couple of years ago. This is just one aspect of the crypto revolution I’ve been talking about for years now.
This is the start of the crypto revolution that will last generations (and beyond) taking hold and eclipsing the legacy systems and networks we rely on today. When you see JPMorgan taking on the likes of Coinbase and Gemini as clients, that’s further validation of the potential of crypto.
The fastest horse
This, of course, hasn’t been the only validation of the progress of crypto in the last week.
Paul Tudor Jones is a founder of Tudor Investment Corporation, a US-based hedge fund. Tudor Investments has around US$38 billion of assets under management. For their clients, Jones puts out regular reports on the macro view of the economy.
He released the May report, titled, ‘The Great Monetary Inflation’ over the course of this week. Of note was the extensive coverage of bitcoin as an asset in smart portfolio construction. Here’s a snippet of what was sent out to the hedge fund’s client base:
‘At the end of the day, the best profit-maximizing strategy is to own the fastest horse. Just own the best performer and not get wed to an intellectual side that might leave you weeping in the performance dust because you thought you were smarter than the market. If I am forced to forecast, my bet is it will be Bitcoin.’
They also performed an extensive comparison of bitcoin to financial assets, fiat cash, and gold. Within that they created a points ranking system and concluded:
‘Bitcoin had an overall score nearly 60% of that of financial assets but has a market cap that is 1/1200th of that. It scores 66% of gold as a store of value but has a market cap that is 1/60th of gold’s outstanding value. Something appears wrong here and my guess is it is the price of Bitcoin.’
Considering Tudor Jones is a stalwart of the legacy system that bitcoin and crypto provides an alternative to, it’s quite some show of support.
He had looked at bitcoin two-and-a-half years ago. But not revisited it as a potential investment strategy seriously until now.
He even noted on CNBC that he had nearly 2% of his assets in bitcoin.
Imagine if all the funds pile in
It’s not too much to think that we could be looking at a large swathe of their resources and funds under management heading crypto’s way.
The world’s top 10 hedge funds account for around US$558 billion in assets under management. Then add in the world’s top 10 investment asset managers, which account for around US$32.34 trillion in assets under management.
So, let’s say with just the top 10 hedgies and asset managers (remember there’s hundreds more of each, with trillions more in their assets under management), if they looked to shift 2% of that money to bitcoin…
That would be around US$658 billion of new money coming to bitcoin.
Now don’t forget, they can’t just up and buy that amount without putting some serious upward price pressure on. Considering the current circulating supply of bitcoin is just US$166 billion, that’s an increase in potential wealth of four times more than the entire value of bitcoin’s fiat-converted value.
And that’s just the start in my view.
This is why I believe it’s not too late. It’s not too expensive. In fact, I’m saying this is still one of the best periods in time that you should be looking to get bitcoin and add to your bitcoin stash.
And what comes next I believe will be a mega cycle magnitudes higher than anything we’ve seen yet. To ride that you’ll want to be clued up and staked in the best crypto beyond bitcoin to really maximise on the new mega cycle.
I see there being huge potential in crypto in this next mega cycle, but there’s a window that won’t linger open forever. And if you come to the next party too late, then I’m afraid you might just miss that window.
Editor, Money Morning
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