$497 million looking for a new home

In today’s Exponential Investor…

  • The Dad Indicator
  • Guggenheim’s big money move
  • You get first dibs… if you want

My inbox is starting to fill up again.

My WhatsApp chats are increasing in intensity.

My Twitter messages inbox is seeing more action.

It’s all thanks to bitcoin.

I have a very loose measuring stick about the greater interest in bitcoin and crypto. It’s usually the frequency of messages my dad sends me from Australia on it all.

Back in 2017 I reckon at least twice a week he’d send me a picture of something in the Aussie papers or something on the mainstream Aussie news channels. No text, no description, just a picture he’d taken while the Aussie media was covering it all.

That dropped off in late 2018, all through 2019 and most of 2020. Then in the last couple of months, the frequency has started to rise.

The most recent one, just a picture of his TV. Except on the TV was a prominent “traditional” investment expert on ABC News. And I could see that bitcoin was plastered on the screen with a chart tracking its fiat money price rise.

I’ve also had a few more friends start to ask again what the best way is to get some bitcoin. The one I’m really looking out for however is when my regular local delivery driver stops coming around and I see him on YouTube as a full-time crypto trader.

That’s likely to be the peak of this next crypto cycle. We’re some way away from that, but who knows, with the most recent big announcement in crypto, anything goes…

The instos are coming

I read yesterday the Guggenheim Macro Opportunities Fund is looking to invest 10% of its net asset value (NAV) into the Grayscale Bitcoin Trust.

It’s reported that the fund has around $4.97 billion in NAV. So we’re talking about one single fund looking to invest $497 million into bitcoin. At the time of writing that works out at around 26,157 BTC.

This is just one traditional finance asset fund – what happens if ten more funds like the Guggenheim Macro Opportunities Fund also want a big chunk of their funds in BTC?

We all know there’s a limited number of BTC out there in existence. Sometime in the year 2140 (it’s estimated) all bitcoin will be in circulation – just under 21 million. Of those, we know that a couple million are in lost wallets to never be recovered.

Maybe at best there will only be around 18 million or 19 million in circulation. That’s not enough for everyone everywhere to have one bitcoin. It’s not enough for funds like Guggenheim to get access to tens of thousands of BTC.

But remember, they aren’t looking to buy 26,157. They want to invest 10% of their NAV – that’s fiat money.

If other funds come knocking, they too are likely to want to allocate a percentage of their NAVs – not get a specific number of BTC.

What I’m saying is the demand will come to invest fiat money into bitcoin, with an ever dwindling supply of BTC actually available to procure. When demand far outstrips supply, what impact do you think that has on prices?

This move from Guggenheim will no doubt spark a lot of other funds to look to add bitcoin to their fund strategies. Many will look to do so through the Greyscale Trust as well.

For Greyscale to facilitate that, it’ll have to get the BTC from the market too. It is after all a bitcoin trust where the units are backed by the actual bitcoin.

Same playing field for all

This is the institutional money I’ve been harping on about for a couple of years now.

This is what big money looks like when it looks to exit the traditional financial system and finds its way into an alternative asset that’s changing the very fabric of global finance.

This is exactly what I’ve said was coming and is now starting to show itself to the masses.

The big picture here is fascinating. It’s also what I consider to still be one of the best wealth opportunities for individuals we’ve maybe ever seen before. What’s so incredible about it, is that a giant fund like Guggenheim can want to get it, but private investors can also get a bitcoin wallet and invest.

This isn’t something that’s closed off to individuals, it’s there for the taking. If you accept the high risk nature of cryptocurrencies, you could get your hands on bitcoin before Guggenheim even finalises its plan of attack.

The institutions are coming, but they move slow.

Regards,Sam Volkering
Editor, Exponential Investor

PS By the way, I had a one-on-one chat on Friday with a very interested (and unlikely) supporter of crypto, Nigel Farage. He wanted to know more about it and had a bunch of questions his Fortune & Freedom readers wanted to know. We sat down to go through a whole bunch of questions which you can watch and listen to here and of course sign up to here to receive the Fortune & Freedom e-letter each day in your inbox along with Exponential Investor.

Category: Cryptocurrency

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