You may be surprised to hear this but Bitcoin, the world’s largest cryptocurrency is crushing it in 2023…
A recent chart by New York Digital Investment Group (NYDIG) revealed the biggest crypto by market cap – Bitcoin – is up by 63%.
And that was before the recent Bitcoin surge past $35,000.
As I write this, Bitcoin is up over 100% so far in 2023…
That’s around 4x more returns than the second best, performing asset – the US Large-Cap Growth.
Interestingly, the worst performing asset this year is US government bonds — the ‘risk-free’ and ‘safe’ asset that underpins the entire financial system!
Can you believe it?
Many analysts, portfolio/fund managers cannot.
So what is the reason for Bitcoin’s outperformance in 2023?
#1: A return to scarce assets
The US government added +$3 trillion in debt — or 10% — over the past 12 months.
And it doesn’t seem to be slowing down, because there’s no political will in the US to rein in budget deficits.
Instead, the US is trying the sneaky trick of currency debasement – through inflation – to do the job for them.
If you can make your money worth less, then the debt load falls in real terms too.
As hedge fund manager’ James Lavish put it:
“Because real GDP will not match this exponential rise in debt, the only way to keep up with the interest payments is to fake that productivity through money expansion and inflation.”
It’s why Bitcoin — a decentralised currency with a fixed supply of 21 million that can’t be debased — is soaring in comparison.
#2: The potential listing on the first spot Bitcoin ETF
Over the past five or so years, asset managers including Van Eck, Ark Invest, Bitwise, and Grayscale have all applied for a Bitcoin spot ETF…
Only to get rejected by the Security Exchange Commission (SEC).
In fact, the SEC has denied over 30 applications for Bitcoin spot ETFs.
The only approved Bitcoin ETFs are linked to the futures markets.
But that may change…
On 15 June, Blackrock filed for a prospective spot Bitcoin ETF.
It was a big deal because Blackrock is the largest asset manager in the world.
The company has incredible influence on government policies, and investment decisions.
Moreover, Blackrock boasts an impressive approval record when filing with the SEC.
Out of 576 filings, 575 have been approved with only one declined.
Fast forward to Monday 16 October…
Cointelegraph posted a “BREAKING” announcement on Twitter.
It read, “BREAKING: SEC APPROVES ISHARES BITCOIN SPOT ETF.”
The tweet is long gone now because the company deleted it. But thanks to the internet remembering everything, we know this was what the tweet said.
That’s what made Bitcoin’s price shoot higher.
However, the tweet was wrong. There was no Bitcoin spot-priced exchange-traded (ETF) approval. Cointelegraph had jumped the gun.
Bitcoin price did retreat once investors found out it was all fake.
But it does give us a glimpse into what could happen when the REAL approval comes through…
Imagine what would happen if it receives approval.
Billions of dollars could flow into the ETF sending the price of Bitcoin flying.
Plus, next year is Bitcoin’s next halving.
So 2024 really could be a banner year for Bitcoin (and cryptos).
In my view, owning some Bitcoin could be an astute investment over the next 18 months.
PS. If you want to profit from the five biggest megatrends of this century, then you need South African Investor.
Not a subscriber to Money Morning?
You can get free daily recommendations like these with Money Morning eletter. Just sign up here.
