Tech investors usually don’t get into the quagmire of currencies or other asset classes, but there is a lot of discussion around Bitcoin. Some well-known investors and technology CEOs are going all out to develop cryptocurrencies. We see that asset classes have become part of the allocation strategy recommended by certain institutional investors and investment banks.
It is undeniable that Bitcoin is a popular currency these days. Bitcoin has nearly quadrupled this year, and almost doubled in 2019. The risk is high. We have seen the assembly fade away in terrible ways before. After several years of monsters, Bitcoin plunged 74% in 2018. However, like everyone else, I decided to make Bitcoin a small part of my portfolio. As a technology investor, you have multiple ways to participate in the cryptocurrency revolution without having to trade in real currency.
A bit of bitcoin
In the past few months, Bitcoin-related investments have grown to 2% of my portfolio. It may not seem like much, but it is enough to give me the potential to make strong returns in the digital currency revolution without risking the bubble bursting and destroying my portfolio.
I currently have three investments and I am catching up with the pace of cryptocurrency.first of all Grayscale Bitcoin Trust (OTC: GBTC), This is the first publicly traded security fully invested in Bitcoin. Grayscale Bitcoin Trust has one drawback-I will talk about it soon-but it is my biggest position.My second largest position is Micro strategy (Nasdaq stock code: MSTR), This is a sleepy enterprise analysis provider that provides a less sleepy method of capital allocation. Spoiler alert: MicroStrategy has a lot of Bitcoin.
My third and smallest position is Bitcoin itself.
Let’s start with Grayscale Bitcoin Trust. Trust has become a way for investors to buy and sell investments that are growing and falling in sync with Bitcoin. The problem with the trust is that its transaction price is higher than the bitcoin it owns. It ended last week at a premium of 24% over its holdings of $22 per share in Bitcoin. Taking into account the scarcity of the product, the premium in the past was much higher, but as more and more cars are put on the market, this gap should narrow. Buying cryptocurrency has never been easier than it is now, and this may or may not help.
Fintech darling square (New York Stock Exchange: SQ) And recently Paypal (Nasdaq stock code: PYPL) Make it possible to seamlessly trade bitcoins as low as $1. Square’s Cash app and now PayPal have been actively promoting access to digital currencies. Easier access to cost-based bitcoins will eat up the attractive premium that Grayscale Bitcoin Trust owns, but the positive factor here is that easier access will increase cryptocurrency exposure, ownership, and final price.
MicroStrategy’s revenue will decline for the sixth consecutive year. Interestingly, CEO Michael Saylor has been using MicroStrategy’s liquidity to buy Bitcoin, and now it has a lot of cryptocurrencies.
MicroStrategy purchased another 29,646 bitcoins at a price of 650 million U.S. dollars at an average price of $21,925 per #bitcoin. Now #hodl has purchased 70,470 bitcoins at a price of 1.125 billion U.S. dollars, at an average price of $15,964 per bitcoin. https://t.co/j6wVLXIzoa
-Michael Saylor (@michael_saylor) December 21, 2020
We are talking about a $1.125 billion bitcoin purchase, which has appreciated in value by $1.9 billion, and the digital currency broke through $27,000 on Sunday night. For technology giants, this will be a big position, but in this case, it is not a small deal for a winding technology company with a market value of approximately $3 billion.
Some technology investors would rather own more assets than just investments that have become Bitcoin agents. As the leading payment platforms, Square and PayPal have strong upside, and these platforms happen to have the role of Bitcoin. If the platform continues to rise and gain widespread recognition, there will also be waste-picking games in the form of Bitcoin mining companies and blockchain stocks.
More ways to have more skins in Bitcoin games will appear. The market will never ignore this booming trend. Correction is inevitable, but volatility can also be an ally for risk-bearing investors. Fasten, Bitcoin investor. The road ahead in 2021 is a difficult one, but investors will still appear in 2020.