SkyBridge Capital has presented to its clients its perspectives on Bitcoin, and has also said that it is better than gold. Why?
This last quarter of 2020 has been an unprecedented journey for Bitcoin. What is impressive is the increase in demand that there is, in contrast to the supply that has decreased after Halving. In that sense, SkyBridge Capital has explained why it bet on Bitcoin with the creation of the SkyBridge Bitcoin Fund and why they consider it better than gold.
What did SkyBridge Capital say about Bitcoin’s growth?
In a presentation, the company explained the motivations for the creation of the SkyBridge Bitcoin Fund. SkyBridge Capital as many will know is a hedge fund management firm, and so it is interesting to see how they have decided to bet on BTC in 2020.
During the presentation they highlighted that a growing adoption of Bitcoin by institutions and individuals is increasing rapidly. Even much faster than the offer. Thanks to this, they said that Bitcoin is like „digital gold“ but with some advantages.
First, SkyBridge Capital said that BTC is an emerging asset class whose risk has decreased in recent years. They therefore believe that this results in „value creation through network effect“. Similarly, SkyBridge highlighted that this year was characterised by regulatory developments and on the Bitcoin infrastructure itself.
Which institutional players have decided to bet on BTC?
According to SkyBridge Capital, and what we at CriptoTendencia have been able to highlight throughout the year, it seems that more and more institutions are betting on BTC. In its presentation, the firm said that JPMorgan, BlackRock, Citi Bank, Deutsche Bank, among others, have highlighted Bitcoin’s potential as a safe haven asset or as a means of diversifying investment portfolios.
What is even more surprising is that SkyBridge said it has invested US$182 million in Bitcoin on behalf of its clients. „Bitcoin is digital gold, and as such is better gold than gold,“ the company said.
The company summarised Bitcoin’s advantages over gold, considering the attributes of both assets, such as transferability, divisibility and fungibility, among others.
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The context also influences, at least in macroeconomic terms
The firm also stressed that fiscal and monetary policies in response to the global economic crisis generated by COVID-19 have „supported“ Bitcoin. This is because that fiscal policy generally consisted of massive printing of money by central banks around the world.
For example, the US Federal Reserve has flooded the markets with dollars. Thus 35% of all dollars in existence have been printed since last March. Additionally, the federal government’s deficit is approximately 25% of GDP, the largest since World War II.
The massive printing of fiat money, says SkyBridge, favours the rise in prices of limited supply assets such as art, real estate, gold and Bitcoin.
SkyBridge’s views on Bitcoin pricing
In the fourth quarter of 2020, institutional demand alone nearly tripled the BTCs that were undermined. Consequently, this gap between the BTCs sold by miners and those demanded by institutions has led to the price increase we have been witnessing.
For example, Grayscale bought over US$1 billion in Bitcoin in November. In the four weeks following the start of the BTC sale, PayPal acquired US$600 million in Bitcoin. These are big numbers, and that’s exactly what SkyBridge Capital highlights when giving its perspectives on Bitcoin.
As a result of this acceleration in institutional investment and scarcity of supply, SkyBridge predicts that the trend will intensify further. In addition, they expect that the sectors that are still undecided will start to invest as well. Pension funds, insurance companies, among others, are some of the sectors that may grow their BTC holdings according to the firm.