Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
The trend of Bitcoin becoming a reserve currency continues. Real Vision, on-demand financial TV covering the world of business and economy, put aside 10% of its cash holdings in the form of Bitcoin. According to Real Vision’s CEO, Raoul Pal, other companies should follow suit.
How Much Did Real Vision Put into Bitcoin?
Although the first wave of crypto adopters tried their best to use Bitcoin (BTC) as cryptocurrency in their daily shopping, it seems the fate of Bitcoin is that of digital gold. JP Morgan Chase analysts already think Bitcoin is on that trajectory to eventually supplant gold. The younger generations are certainly more enthused by Bitcoin, as it eliminates the burdens of physicality – security, mining, and transportation.
Not that Bitcoin’s duality as a payment method and a store of value detracts from either. In fact, this duality may tip the scale on both ends. Although still considered a risk asset, in 2020, Bitcoin became a treasury asset, from nations to major companies:
Iran adopted Bitcoin for international trade, in lieu of severe US-led sanctions.
Mode Global Holdings allocated 10% of its cash holdings for Bitcoin.
Square payment processor bought $50 million worth of Bitcoin, representing 1% of Square’s total assets.
MicroStrategy intelligence firm bought $425 million worth of Bitcoin. Its founder, Michael Saylor likened Bitcoin to a “bank in cyberspace”.
Guggenheim fund is readying to turn 10% of its $5 billion assets into Bitcoin.
Overall, major institutional investors hold $4.5 billion worth of Bitcoin, according to BitcoinTreasuries. Adding to that seemingly unstoppable Bitcoin train is Real Vision TV.
Real Vision Used BlockFi to Buy Bitcoin
Interestingly, Real Vision didn’t use Coinbase or other major brokers to purchase Bitcoin, but BlockFi. The three-year-old company is one of the emerging hybrid platforms that offer DeFi-adjacent yields with up to 8.6% APY, in addition to being a crypto exchange. Those who seek some guarantees over exceptionally high DeFi yields should find BlockFi to be an enticing solution.
Having turned 10% of its cash holdings into Bitcoin three months ago, Real Vision employed the dominant cryptocurrency for loaning via BlockFi, currently netting them 6% APY. You will notice that most institutional investors don’t go over 10%. Real Vision’s CEO, Raoul Pal, explains this risk-managing strategy:
“It’s only 10%. What’s the worst that could happen? It goes down 50% and we lose 5% of our treasury. Well we’re a subscription-based business; we generate cash, so should be fine. But if it goes up 10X, it makes a decent difference.”
Pal further notes that company shareholders are still iffy about Bitcoin as an investment asset, which is why we are not seeing even greater institutional adoption. With JPMorgan Chase coming out saying that Bitcoin is likely to overrun gold, it is a good start, but more banks have to do their research to give shareholders peace of mind.
Pal Thinks Bitcoin is Headed Toward $1 Million
If you take a look at this long-term graph, it is easy to conclude that the Bitcoin train has no stopping brakes.
Pal takes this graph to heart and expects to see that threshold reached within this decade:
“I do think it gets to $1 million… Now that’s within the next five to six years. So, where does it get to this year? I don’t know, somewhere between $150,000 and $300,000. It’s impossible to know but it’s a lot further than here.”
However, it would be wise to remember that Bitcoin operates in the space of government regulations. Nothing in the world remains static. If for some reason Bitcoin is cut off from being bought or sold for sovereign currency, such a measure could ruin it.
In the meantime, many expect institutional investors to drive the BTC price further as they integrate it into their platforms.
What does Bitcoin’s future look like to you? Let us know in the comments below.
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firms specializing in sensing, protection and control solutions.