Interest from two camps is driving the Bitcoin price higher. The first wants to make a quick buck by capitalising on the interest and selling at a profit. The second sees the digital asset as a scarce resource which will increase in value because there is a fixed supply and normal currencies will be devalued by inflation.
While its moment in the limelight will fade and the punters will disappear, I believe that more and more “serious” investors will start buying cryptocurrencies as part of their investment portfolios as a hedge against rising inflation.
One group leading the way is Ruffer, the £20bn British fund house which bought Bitcoin to protect against inflation in its “all-weather” portfolios. BlackRock, the American fund giant, has also opened up two of its funds to invest in Bitcoin “futures”, a way of profiting from Bitcoin without owning coins directly. Chief executive Larry Fink said Bitcoin was here to stay.
I think he is right and other big investors will follow suit. Once the biggest players are onboard, a flood of new money could flow into Bitcoin, driving up its price. Given that we have over 100 years until the final Bitcoin is expected to be mined and it is only 12 years old, the journey has just begun.