From Refugees To Hedge Funds: Bitcoin’s Universal Appeal

Bitcoin has reached an interesting inflection point. Whereas at one point its primary use was for black market sites like Silk Road, bitcoin has now found an almost universal appeal. It has become attractive to people dealing with economic catastrophes, as well as to institutional investors like JP Morgan, Fidelity, and the Yale Endowment fund.

How can bitcoin serve those living on society’s margins, as well as the wealthiest entities in the world? It turns out, a digital currency that is borderless, apolitical, and decentralized has universal appeal, regardless of socioeconomic status or country of origin.

Bitcoin’s Appeal for Economic Upheaval in Fiat Economies

Between hyperinflation in Venezuela, political instability in Hong Kong, and uncertainty in the United States due to the trade war with China, bitcoin has become a “go-to” currency for those experiencing turmoil in fiat markets.

Data from Grayscale suggest an inverse relationship between monumental market events and bitcoin’s value, with Brexit, Grexit, and the US-China trade war all cited as occasions when interest in bitcoin surged.

Political unrest in Hong Kong brought bitcoin prices to a 4 percent premium in the city. As election uncertainty proliferated in Argentina, bitcoin was trading “10% higher than on many international crypto exchanges” according to reporting by Bloomberg. Given the Chinese government’s manipulation of its own currency, the Yuan, demand for bitcoin is also up in China. 

With so many examples around the world of bitcoin being used as a safe haven, Anthony Pompliano, crypto influencer and CEO of Morgan Creek Digital Assets, expressed the importance of assets that “cannot be manipulated by a single country or politician.”

His statement underlines the distinguishing characteristics of bitcoin—digital, decentralized, and peer-to-peer— which make it so valuable to those suffering the economic fallout of poor government decision-making. 

Nexo’s Managing Partner Antoni Trenchev shared these sentiments in an interview with CNBC’s Squawk Box Europe, saying, “I think the beauty of Bitcoin is the fact that it’s truly decentralized and that makes it censorship resistant.”

Bitcoin’s Appeal as a Portfolio Diversifier for Institutional Investors

Bitcoin’s defining attributes also make it a smart portfolio diversifier for institutional investors. Pompliano recently made the following prediction via Twitter:

Bitcoin will eventually be in every institutional investors' portfolio. Just a matter of time.

Here is a piece of the conversation @JoeSquawk and I had about this idea.https://t.co/Y4CAFhnivb

— Pomp