Bitcoin had a Barmitzvah. © Stephen Boykey Siddeley | Stephen Boykey Siddeley | Coins | January 2024

© Stephen Boyke Siddeley

(Image: Leonardo.ai)

Today Bitcoin became a person. It’s been just over 13 years since blockchain transmitted its first transaction. This is roughly the same age that Jewish boys undergo their bar mitzvah ceremony, marking their transition from childhood to adulthood under the watchful eye of elders. Given its testosterone-driven history, please excuse me if I assume that Bitcoin is a male gender.

That’s probably a stretchy metaphor. But it’s not that wild. The moment the Securities and Exchange Commission gave its long-awaited blessing to a slew of ETFs after the market closed on January 10, cryptocurrencies graduated from undisciplined and capricious offspring of technological innovation to dull members of the financial asset class. Leading among dollars, stocks, gold, real estate, debt and collectibles.

Perhaps a summary is needed. It’s been a long and winding road for Bitcoin ETFs. Since 2014, more than a dozen companies have applied to the SEC, but all have been rejected. There has been a flurry of columns trying to understand the real reasons behind regulators’ steadfast resistance to these applications, including a colorful tapestry of conspiracy theories that, given history, may have a kernel of truth within them. Anyway, those days are gone, and the SEC, after much wrangling, fine-tuning, and fine print, opened its doors.

Accredited firms are among the largest and most established asset managers on the planet, including big names such as Blackrock, Vanguard and Fidelity. They collectively oversee approximately $25 trillion in investor funds. It is difficult to imagine a more powerful civilian military wielding global financial influence. Their successful ETF represents the most important event in Bitcoin’s young life.

why? Because these asset managers are old-school security guards: risk-averse, compliant, and financially astute. They’ve been doing this for a long time, and when they decide to put their money somewhere, everyone takes notice. It includes the most important gatekeepers: financial advisors who guide clients’ money to safe harbor.

And now Bitcoin is considered one of the safe harbors. Who would have thought this would happen?

For those of us who have long been convinced of the value of Bitcoin, watching this unfold is filled with considerable satisfaction and joy. For over a decade we have been left feeling hurt and assaulted by the squinty eyes, sneers and general ridicule. It feels good to finally say, “I told you so.” But there is also some regret as we see Bitcoin becoming partially embedded in the financial system it was originally intended to replace.

Certainly most people had no interest in this whole topic. But at least the hundreds of billions of dollars that will flow into these new assets over the next few years will have to come from somewhere, and it will come from existing assets and investments, which means diluting the value of current assets. portfolio.

How will this unfold? Consider this:

Standard Chartered, one of Britain’s oldest and most conservative banks, has just announced report Learn about Bitcoin price prediction for the next two years. Looking at what has happened to the price of gold since the first gold ETF was launched, they found that the price of Bitcoin has double The same goes for this year and 2025. This is a four-fold increase in price. There’s no telling whether this will succeed (predicting cryptocurrency prices has historically been a fool’s game), but a growing number of seasoned researchers are predicting similar numbers. So those of you who think you’ve already missed the boat might want to think again. It’s hard to imagine another investment option with greater potential. (I’m not giving financial advice here. I’m just a columnist.)

Pantera Capital CEO Dan Morehead, Microstrategy CEO Michael Saylor and other financial leaders have all used phrases like ‘the most asymmetrical deal in history.’ This means huge upside and limited downside. There are many mistakes between cups and lips and all that, but the logic is unassailable. These giant financial institutions are so confident of pent-up demand that they are now entering into bidding wars with each other. Who will offer the lowest annual fee. (Currently, this is 0.24% for Bitwise, which is aggressive, at least compared to the average stock brokerage fee.)

And in the long run? The final trajectory is a bit hazy at the moment, but prices will certainly stabilize as it matures. It is fair to assume that their risk profile will fade, their childhood indiscretions will be forgotten, and they will become productive members of society, fulfilling the investment goals others have left unfulfilled, as every parent hopes for their children.

But perhaps more importantly, these ETF approvals represent the approval most of the cryptocurrency industry has been waiting for – the general approval it has always sought. This means that other digital assets, from Ethereum’s Ether to property rights secured by NFTs to real-world asset tokenization, are now taking the stage, being respected, and even being emulated.

Other boys will become men too.

Steven Boykey Sidley is Professor of Practice at JBS, University of Johannesburg. His new book, It’s Mine: How the Crypto Industry is Redefining Ownership, is published by Maverick451 in SA and Legend Times Group in the UK/EU and is available now. First published in Daily Maverick