The Risk of Not Owning Crypto
Dummy Insurance For Your Portfolio
AB updates are for informational purposes only. Do not construe any of the following as investment, financial, or other advice. You make your own decisions.
AB Research is a culmination of research & insights from the diverse capacity of the AB Team. Ultimately our focus & mission is financial freedom. This is a special edition.
You’re starting to see it on the news. Crypto. Bitcoin. Ethereum. Once again, Bitcoin has hit all time highs. Over the past few years, stories about crypto were almost always negative. Traditional media made crypto seem like a scam.
Sam Bankman-Fried was the FTX guy who used crypto and went to jail.
Bitcoin is only used for money laundering and criminals.
These are media narratives that most people can not avoid.
Hopefully, after reading this memo, you can think for yourself about crypto. Is it world changing technology? What are real uses? How should one think about assets to buy? Even with doubts about crypto, one should view it as adding dummy insurance to any portfolio.
Dummy insurance protects a portfolio as a hedge. If crypto is transformative technology, a 5% allocation will be enough to improve your life. If not, a 5% loss will not ruin it.
Advantage Blockchain is here to educate investors through the process of owning crypto. Last week’s US elections was a fundamental shift for the industry. As results became clear, Bitcoin rallied to all time high. There is now a pro crypto Administration, Congress, SEC, and CFTC. Headwinds have shifted to tailwinds overnight.
What is Crypto and why should everyone own some?
The original Bitcoin white paper is titled: Bitcoin: A Peer-To-Peer Electronic Cash System. Bitcoin allowed humans to coordinate in new ways by sending value (money) anywhere in the world. It created hardness for digital assets. The invention of Ethereum expanded upon Bitcoin’s core properties of trustlessness, security, and financial sovereignty. Josh Stark recently wrote:
Hardness is the capability to make the future more certain.
Ethereum offers us hardness. We can give Ethereum code and receive a very strong guarantee that it will run any time we call on it. We can give Ethereum data and know with certainty it will still be available in the future, unaltered and uncorrupted.
These simple building blocks give rise to more complex forms of coordination. Money. Contracts. Governance. Identity. Today Ethereum is the hard foundation of a digital economy where millions collaborate across time and space and nation.
Well articulated. Crypto represents digital property rights as a store of value and medium of exchange. The leading blockchains continue to attract talented individuals as developers solve key issues. Bitcoin is only 15 and Ethereum is only 9 years old. There have never been a larger universe of potential buyers for any asset, ever. Blockchains create the first permissionless global financial markets in history, and institutions everywhere are rushing to allow customers access. Anyone in the world can download a wallet and buy crypto. As crypto prices rally, it will continue to attract more attention. The people that think Bitcoin is expensive at $80K will think it’s cheap at $100K, human psychology is powerful.
Crypto is the digital wild west. It has its own problems: adverse selection, buying the top, negative coverage from traditional media, and a constant rotation of scammers. As an open source and permissionless network, people can build almost anything on blockchain rails. The biggest constraint is creativity. Advantage Blockchain believes that professional management can help mitigate the largest risks associated with crypto while providing exposure to the upside.
What are real uses for this technology?
2024 was a breakout year for crypto. In January Bitcoin ETFs were approved and have been the most successful ETF launch in history, reaching $86B or 5.14% of the total BTC supply. Polymarket dominated the election cycle, calling certain races and events hours (or even days) before traditional media outlets. Stablecoins have captured the attention of investors around the world with Tether’s earnings, more profitable than BlackRock, and Stripe’s acquisition of Bridge for $1.1B.
Institutional investors are increasingly allocating mindshare to Bitcoin and Ethereum. ETF inflows are increasing post election. Blackrock, Coinbase, Sony, and JPMorgan are building on Ethereum! Banks are using Chainlink to improve SWIFT. Now is the time to pay attention. Advantage Blockchain believes this is world changing technology. The Ethereum ecosystem will continue to evolve with Pectra and Fusaka upgrades planned in 2025. The efficiency benefits generated by crypto will force all industries to embrace this technology or face disadvantages with competitors. No one wants to be Sears fumbling the internet.
How should one think about assets to buy?
As always, You make your your own decisions. Crypto is the Wild West. Opportunity comes with risk. No one on the internet has the answer for your specific situtation. The two major crypto assets with ETFs are Bitcoin and Ethereum. People can buy them in a brokerage account. We’re entering Year Four of the four year cycle. This is when it starts to get crazy and then the party ends before most people leave, round tripping their portfolio. Your crypto journey, like the Oregon Trail or African Safari, is much easier with a guide. Advantage Blockchain is here to be that resource, reach out to us with any questions.
Cheers,
Whitetail & Co
AB updates are for informational purposes only. Do not construe any of the following as investment, financial, or other advice. You make your own decisions.
