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The world’s largest cryptocurrency Bitcoin hit a record high of more than $ 67,000 last month. At the time of writing, a single bitcoin costs $ 60,750 and has a market cap of $ 1.14 trillion on the cryptocurrency. A major reason for Bitcoin’s exponential gains over the past 18 months is the widespread institutional adoption of the digital asset.
Indeed, several public companies have, including Tesla and MicroStrategy, are now keeping Bitcoin on their balance sheets. The CEOs of these two companies – Elon Musk and Michael Saylor – have been very vocal about Bitcoin’s long-term potential. At the end of the third quarter, MicroStrategy had more than $ 7 billion worth of Bitcoin on its books, which is quite significant given that the company is valued at a market cap of $ 7.62 billion.
MicroStrategy has taken out leverage to buy Bitcoin, which could be considered a risky strategy given the volatility associated with the digital asset. However, should the Bitcoin price continue to reach record highs in the future, MicroStrategy’s risk will be rewarded with a massive rise in share prices.
JPMorgan CEO describes Bitcoin as worthless
Several other C-level executives on Wall Street remain skeptical of the cryptocurrency space. Last month, JPMorgan (NYSE: JPM) CEO Jamie Dimon stated that cryptocurrencies will soon be regulated by governments for the sake of combating money laundering and taxes. Dimon said, “I personally think Bitcoin is worthless.”
But one of the largest banks is also offering its wealth management clients access to cryptocurrencies, suggesting that JPMorgan draws a small portion of its revenue from this highly disruptive asset class.
Dimon isn’t the only bitcoin bear on Wall Street. In a CNBC interview last year, investment mogul Warren Buffett stated, “I don’t have Bitcoin. I don’t own a cryptocurrency, I never will. ”The Omaha Oracle further warned:“ Cryptocurrencies generally have no value. They don’t produce anything. You can’t do anything with it except sell it to someone else. But then this person has the problem. “
However, Bitcoin bulls will be quick to point out that cryptocurrencies are based on a fundamental technology called blockchain. Bitcoin is a decentralized digital currency and offers several advantages compared to fiat currencies, especially for value-preserving investors.
Historically, Warren Buffett has shied away from doing business he doesn’t understand. Buffett’s company Berkshire Hathaway had no exposure to tech for several decades as it was viewed as too disruptive for long-term investors. But now, Apple makes up 40% of Berkshire’s investment portfolio. A U-turn in the oracle of Omaha should therefore not be completely ruled out.
What’s next for Bitcoin?
Bitcoin carries significant risk due to the underlying volatility and lack of regulation associated with this asset class. Cryptocurrency experts believe that this volatility will decrease as Bitcoin continues to gain momentum on a global scale.
Investors with a high risk appetite will be tempted to invest in Bitcoin and make market-leading profits over time. However, given the uncertainties in this segment, it is also advisable to invest whatever amount of capital you can afford in Bitcoin and other cryptocurrencies.