Crypto may have gotten its start kicking around the edges of the establishment as it sought alternative offerings from the traditional, centralized way of life, but it could be becoming a mainstream movement with staying power. While professional investors and advisors could once easily dismiss crypto as a fad, ignoring it now could come at the cost of lost business as investors are increasingly clued in to the potential that crypto investment can offer.
Matt Hougan, global head of research for Bitwise Asset Management, recently discussed crypto’s staying power and the challenges that it still faces in an article for Forbes. Crypto has grown to be a $2 trillion industry, one that has drawn investment from 55 of the top 100 financial institutions, attracted 5% of all venture capital in the U.S. in 2021, and where the largest crypto exchange, Coinbase, has more than twice the amount of accounts as Charles Schwab.
“Crypto pioneers may not like it, but you are no longer a renegade if you’re investing in crypto. You’re standing shoulder to shoulder with Ray Dalio, Stan Druckenmiller, and many more of the smartest investors in the world,” Hougan wrote.
However, on closer inspection, crypto reveals that while it may be a mainstream movement, it is still in its relative infancy. That said, it is growing rapidly. Many of the top financial institutions are investing in crypto, true, but those allocations remain small and limited; Coinbase has more accounts than Schwab, but those accounts are generally much smaller in size. Crypto is the puppy in the corner, with giant paws and gangly legs that will quickly grow to a much more substantial animal, but for now is still filling out with its share of growing pains.
From Zero to One, and Onwards
Crypto has made that crucial first step, though, and the hardest one for any technology looking to make it long-term and prove its staying power: the journey from zero to one.
“Crypto has gone from zero to one. There is now too much talent, too much money, and too many proof-of-concept demonstrations to imagine that crypto will simply disappear in the future,” Hougan explained. “What we don’t know yet is if it can go from 1 to 100.”
Advisors need to recognize that the point of no return has already been crossed, that crypto is here to stay in some form of fashion, and to pretend otherwise ultimately could come at a cost. It remains to be seen if it can find a way into a seamless day-to-day integration, as relevant as an iPhone, as necessary as any of the other technologies we use to navigate our lives, but it is here to stay in some form.
“So for investors, it’s time to stop asking zero-to-one questions. No more worries about widespread government bans, or generalized custody limitations,” Hougan wrote. “Sure, we have work to do on those items, but we’re past total failure. Crypto is not going back to the fringes.”
Bitwise offers the Bitwise Crypto Industry Innovators ETF (BITQ), the Bitwise 10 Crypto Index Fund (BITW), and a host of other crypto funds focusing on various aspects of the crypto economy.
For more news, information, and strategy, visit the Crypto Channel.