Adoption of bitcoin is accelerating at an unprecedented rate. Bitcoin is the world’s first investment megatrend in which retail investors have led institutional allocators. And, until the advent of the Great Corona Recession, that dynamic was not given much consideration by the investment banks, hedge funds and asset management titans.
The rapidity and magnitude of the bounce in equities and risk assets in March of last year was caused in large part by the new force that retail investors represent in markets, empowered by fresh access to information and markets via online platforms around the world. The recent coordinated targeting of concentrated short-interest stocks by the “Reddit Revolutionaries” was reminiscent of the Arab Spring, where use of social media catalysed regime change.
The r/wallstreetbets group was similarly well informed and demonstrated its capability to move markets, triggering political uproar and a temporary concern for the structure of the U.S. equity market’s clearing and settlement structure. Retail investors have now permanently affected the asymmetry of short bets in single-stock equities that require traditional “market-neutral” hedge funds and asset managers to deploy more sophisticated strategies and mechanisms for managing risk.
Why We’re Living In The Bitcoin Age
Bitcoin has exploded due to the confluence of a number of factors. It is “better at being gold than gold” in as much as it is instantly accessible (does not require trust in an intermediary, administrator or appointment at the vault), has a lower cost of carry than bullion and has an absolutely constrained supply of 21 million (whereas advances in refining technology and environmental, social and governance shortcuts can generate more metal).
The rate of change of balance-sheet expansion at the European Central Bank (ECB), Federal Reserve and other G4 central banks is unprecedented. The “debasement of fiat currency” has moved from being “crypto…