Veteran Investors Change their Mind about Digital Currencies – Only the Market Knows the Truth
As blockchain markets have finally turned bullish again, even some of the harshest opponents of digital currencies are changing their mind; the market has proven them wrong. Bitcoin is one of the best-performing assets of all times.
“There’s definitely a desire among people around the world to be able to transfer money easily and confidentially. I believe Bitcoin and other currencies of that type are going to be alive and well.”
That’s a recent quote from Mark Mobius, the co-founder of Mobius Capital Partners and a legendary veteran investor. He once branded Bitcoin a “real fraud.” Now he has changed his mind.
Ten years have gone and Bitcoin is still alive and thriving
Mobius is not the first former Bitcoin opponent who his changing his tune regarding the potential of digital currencies. As Bitcoin is gaining momentum, many who had previously announced it would go to zero have to admit that they’ve jumped to conclusions.
It’s not surprising that veteran investors like Mobius have been rather unswayed at first by the value proposition of digital currencies. When the technology was still brand new, hardly anybody trusted the concept, regulators issued warnings, and overall skepticism was high.
Flash forward ten years, digital currencies are still around, and they have survived a one-year bear market. More than just survived, since its inception, Bitcoin has brought investors over 194 million percent returns. As time goes by, veteran investors take note that Bitcoin is still alive and it is doing well. That has let to a flip in mindset for many.
Furthermore, the financial industry establishment initially looked at digital currencies as a competitor. In the meantime, many have understood the benefits they can add to investors, financial institutions, and the economy as a whole. Even JP Morgan’s Jamie Dimon, who has been among the harshest critics of digital currencies, has in the meantime acknowledged their use by launching JPM Coin.
Asset managers welcome volatility and asymmetric risk
Bitcoin has been around for 125 months. Out of these 125 months, buying and holding the asset would only have resulted in losses in three months. In the remaining 122 months, investors would have generated profits.
Admittedly, during those three months, Bitcoin had temporarily had massive losses. That’s why timing the market matters even more if volatility is high. “You have to be careful,” says Mobius. “You have incredible volatility and, at the end of the day, you can’t chase one individual group or one organization that will keep track of what is going on,” he says.
He is right. Investing in blockchain markets requires an in-depth understanding of how this market works. But assuming asset managers understand their craft, volatility is one of the most attractive qualities of digital currencies. Asymmetric risk enables portfolio managers to greatly increase the return on risk in any otherwise well-diversified portfolio.
Mobius’ shift in opinion matters, because as digital currencies gain more mainstream adoption among public figures, investment funds, and traditional finance industries, investors will gain confidence and increasingly look for digital currencies to diversify their portfolios. Watch out; many more Bitcoin-proponents will surrender soon, too.