Note: This article does not constitute financial advice.
Like many, when I first heard of bitcoin, my reaction was “Why would anyone invest real cash in magic internet money?” It was worth zero — backed by nothing. And, like a fool, I was keen to point this out to anyone who would listen. But still, I was curious what the buzz was about, so I continued to keep an eye on it until, in 2015, I had a mental breakthrough. I was listening to a podcast when Wences Casares made a statement that went something like this:
Bitten by the bug, I spent months reading anything bitcoin-related, talking with friends, developing an investment thesis and assessing probabilities that bitcoin could actually achieve these outcomes. Like any good MBA graduate, I quickly worked up a SWOT analysis (strengths, weaknesses, opportunities and threats) and a simple pricing model that compared the number of network wallets to price. At the end of this exercise, there was only one answer: It was prudent to invest a small percentage of my portfolio in bitcoin. For me, I chose 1 percent of investable assets. And now, like all other bitcoiners, I wish I had invested far more.
Below is my hopefully simple and concise explanation as to why I still believe bitcoin is a great investment, and quite possibly, the best investment opportunity there is right now. Let’s look at some key drivers of price, current macro trends and risks.
In my opinion, “printer go brrrr” is not exactly accurate as some of this is a swap of similar assets, but the Federal Reserve did effectively prevent wide-scale deleveraging during the COVID-19 pandemic by aggressively opening lines of credit, lowering rates and embarking on the most aggressive quantitative easing (QE) program we…