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Bitcoin's Outsized Returns Too Good for Investors to Ignore: Expert

CryptocurrencyOct 14, 2021 22:18
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By Yasin Ebrahim

Investing.com – Bitcoin is riding a wave of optimism toward $60,000 that is unlikely to end as institutional investors are finding it difficult to ignore the popular crypto's outsized returns at a time when its making its mark as a legitimate reserve asset.

BTC/USD was up 0.81% to $57,438.

The outsized returns in bitcoin come as investors are beginning to appreciate that bitcoin is "establishing itself as a legitimate reserve asset," Greg King, CEO of Osprey Funds said in a recent interview with Investing.com. As activity on the Bitcoin network gathers pace, higher returns - that are uncorrelated with traditional investments like stocks and bonds - will follow, and drive up investor adoption.    

"As the network effect takes place and more participants, enter the ecosystem that will drive outsize returns and also outsize volatility, King said. "Investors are always on the hunt for uncorrelated sources of return, especially if they are superior."  

But the popular crypto's journey to establishing itself as a legitimate reserve asset is still in the early innings. More roads, or on-ramps, that pave access to bitcoin need to be developed.

On-ramps such as cryptocurrency exchanges or over-the-counter markets, which are more commonly used institutional investors with larger positions, play a vital role in bringing new investors and users into the cryptocurrency world.

Similar to the ease of accessing exposure to gold, eventually everyone who "wants to have positions in Bitcoin will be able to, and we'll reach an equilibrium," according to King.

"But we're not there because of the on ramps that still need to be built, the institutional processes that still need to be run, and the investment committees that need to fully understand and do due diligence and get comfortable [with bitcoin]," King added.

There are, however, some who suggest runway for bitcoin as a store of value or "digital gold," is limited, as its market cap of about $1 trillion may not have much room to run once it usurps the market cap of gold of about $10 trillion.

But unlike gold, bitcoin has more to offer than a simple store a value.

"Bitcoin's portability, divisibility, and ubiquity in a lot of ways is superior to that of gold ... you could have a situation where the market cap of bitcoin exceeds that of gold," King said.   

Bitcoin's Outsized Returns Too Good for Investors to Ignore: Expert
 

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