Wall Street has come across many buy-bitcoin narratives driven by several investment advisers – but they fail to realize bitcoin’s real value lies in emerging markets.
Buy-bitcoin investment advisers may have to return to the drawing board again after a few attempts to market bitcoin to potential investors.
With today’s recent market positivity, some speculate that there may be chances that the US Federal Reserve will bring equilibrium – a soft landing – in the world’s biggest economy. This may change many investor stances on the cryptocurrency, as traditional investment methods may seem increasingly appealing.
While bitcoin has its uses in the investment world, its true potential shines way beyond the language and logical framework of TradFi markets.
What about Bitcoin has been pitched so far to Wall Street?
Bitcoin has gone through many narratives in order to be pitched as an asset that’s easy to understand for Wall Street. Here are some pitches on bitcoin that investment advisers have brought up.
“Bitcoin is an inflation hedge.”
The cryptocurrency was once advertised as an inflation hedge – an asset that’s intended to protect the investor in case inflation happens. In this case, investors would hedge bitcoin against a fiat currency to gain profits. But would this work?
In reality, there’s no real successful inflation hedge. There’s also no such thing as an asset class guaranteed to increase in value in inflationary and non-inflationary times.
Bitcoin’s collapse in 2022 happened right when consumer prices were surging up – which isn’t quite what an inflation hedge would do.
“Bitcoin is digital gold.”
Enthusiasts of the coin often refer to the cryptocurrency as ‘digital gold’.
International banking giant Goldman Sachs has been famous, making headlines with its executives believing and saying that bitcoin is a scarce digital asset that provides a long-term store of value, despite ongoing political and economic uncertainty.
However, it’s hard to make the case. Bitcoin is hardly correlated with gold, and many newcomers to bitcoin after the 2021 wave have suffered wealth losses.
Rather, some point out that cryptocurrencies like bitcoin are more linked to speculative parts of the market, such as tech stocks.
“Bitcoin is The Option”
Many investors want to find more options to diversify their portfolios. Still, it should be emphasized that bitcoin is another option out of many – not just a main asset to hedge against.
Some investors have been running with the idea that you should be owning bitcoin in the long run as a warrant or an option in case a future collapse in our current dollar-centric international monetary system were to happen.
This bet runs on the coattails that the central bank, particularly the US central bank, would eventually collapse. This is a fairly far-fetched dream, with recent economic evidence showing that the markets are ready to head back up again.
Why it isn’t quite bitcoin’s time in Wall Street…yet
Bitcoin, amongst other ideas, was originally coined up as an alternative that would shine in the face of the unreliability of the central bank. With bitcoiners believing that the US Fed’s aggressive fund rate increases will lead to a lack of confidence in the central banking system, recent data shows otherwise.
According to US data, things are getting to look better. Unemployment in the country has been the lowest in 53 years, with a rate of 3.4% recorded. Despite inflation still being high, it’s easing up. The US consumer price index showed an annualized advance of 6.5% in January, down from 7.1% in February.
This week, the International Monetary Fund increased its 2023 forecast for the world economy to 2.9%, up from its October 2022 forecast of 0.2%.
Stock and bond markets are also rapidly rebounding within the US, with inflation cooling down and the economy also slowing down – and some economists speculate that we’re reaching an era of manageable economic growth.
It seems unlikely that BTC would be used on Wall Street as an option against the US dollar’s collapse. But where can it be meaningfully used instead?
How should I approach bitcoin today?
Without a place in Wall Street, some investors may find it difficult to place value in bitcoin.
Instead of heading to Wall Street and similar big markets, we should look further into countries where bitcoin is being used regularly. It can provide opportunities to boost and promote local economies there through cryptocurrency.
Within Chainalysis’s top crypto adoption index, emerging markets dominate the list. Excluding the United States, the world’s top 10 crypto adopters are Vietnam, the Philippines, Ukraine, India, Pakistan, Brazil, Thailand, Russia, and China.
Within the list sits Vietnam at first place – where the country is noted for having one of the world’s lowest rates of financial inclusion: with barely more than 30% of the Southeast Asian country’s adult population having a central bank account.
Another market to consider is Nigeria, where adoption is rapidly scaling up as there’s a huge demand for bitcoin within the country. On top of having a huge premium for BTC over USD (almost double) in Nigeria, many have opted to use the cryptocurrency instead of being forced to use the local digital currency.
Without thinking outside the box, it’s pretty tough to justify bitcoin as an investment decision. But it should be emphasized that if you’re looking to use bitcoin in your portfolio as a backup against the traditional markets, think again. Bitcoin operates on a set of different risks, opportunities, and values than whatever else is offered in the traditional market.
