Billionaires target cryptocurrencies to hedge inflation
Financial billionaires’ interest in the cryptocurrency industry is growing as they view Bitcoin and other large capitalization cryptocurrencies as inflation-resistant assets despite their volatility.
Invest in crypto to hedge against cash devaluation
In 2017, Interactive Brokers President Thomas Peterffy published a full-page ad in the Wall Street Journal warning of the risks Bitcoin futures contracts pose to capital markets. Today, the Hungarian-American billionaire, with a net worth of around $ 25 billion, is an expert on cryptocurrencies. Peterffy advises investors to invest 2-3% of their personal wealth in cryptocurrencies in case the fiat currencies are heavily devalued.
Billionaire Thomas Peterffy holds a number of cryptocurrencies while his company recently started offering Bitcoin, Ethereum, Litecoin, and Bitcoin cash trading services to clients after they were in high demand.
The 77-year-old billionaire said Interactive Brokers will allow its customers to trade 5 to 10 more cryptocurrencies starting this month. He argues that cryptocurrencies can produce exceptional returns, even when the opposite is also possible. “I think the value of crypto could go to zero, but I also think it could be as high as a million dollars,” he said.
The case of Thomas Peterffy shows the changing attitudes towards cryptocurrencies among billionaire investors who once despised or were suspicious of cryptocurrencies but realized last year that they cannot afford to forego the potential to make big profits .
Even though prices in the cryptocurrency market fluctuate a lot, investors large and small are eager to buy and sell Bitcoin and Ethereum, as well as non-fungible tokens (NFTs) based on blockchain technology, and other junk cryptocurrencies (shitcoins).
Just months after billionaire Ray Dalio, founder of the world’s largest hedge fund Bridgewater Associates, expressed his skepticism about maintaining the value of crypto assets, he recently announced that he had Bitcoin and Ethereum in his portfolio.
He sees it as investments in alternative currencies in a world of cash that is increasingly depreciating as inflation erodes its purchasing power. “Cash is no longer a safe investment because it is ‘taxed’ by inflation,” he said.
Billionaire Paul Tudor Jones, founder of investment firm Tudor Investment Corporation, says he prefers cryptocurrencies over gold as an inflation hedge. He said the percentage of cryptocurrencies in his portfolio is in double digits.
A recent survey by Goldman Sachs of more than 150 wealth management companies in the world’s super-rich families with which the bank does business found that 45% of them would like to add money against rapid inflation.
Become a mainstream financial investment trend
Cryptocurrency investing is increasingly becoming the mainstream financial investment trend. Last October, within two days of its launch, ProShares’ first exchange-traded Bitcoin futures fund (ETF) attracted more than $ 1 billion in investments in the US.
But then the money flowed and the price of this fund certificate sank dramatically. Cryptocurrency investors are hoping that U.S. regulators will approve an ETF that actually holds bitcoin by 2022.
In April 2022, Coinbase Global Company, which owns the largest cryptocurrency exchange in the United States, went public and now has a market capitalization of $ 54 billion. According to the Bloomberg Billionaires Index, Coinbase Global founder Brian Armstrong’s net worth is $ 9.7 billion.
The blockchain technology behind cryptocurrencies also intervenes in the arts and culture sectors. Earlier this year, “Everydays – The First 5000 Days,” an NFT painting by artist Mike Winkelmann, sold for a record $ 69.3 million through Christie’s auction house.
The American singer-songwriter Katy Perry and the Canadian musician Grimes as well as the company of the South Korean boy band BTS all want to benefit from the NFT industry.
Back in December, Katy Perry teamed up with blockchain company Theta Labs to sell 2,500 NFT images related to her for $ 100 each. It is not unreasonable for fans to spend $ 100 to own an idol’s NFT. In addition, owning this NFT gives them access to VIP positions or other perks at some future Katy Perry music events.
President Nayib Bukele of El Salvador, a South American country, has even legalized Bitcoin and his government is constantly buying into the world’s largest cryptocurrency by market capitalization.
Cryptocurrency promotions will remain strong in 2022 as well. The famous sports arena Staples Center in Los Angeles, USA, will be renamed Crypto.com Arena after the cryptocurrency exchange. Crypto.com (Singapore) has signed a $ 700 million contract to own the betting rights to this arena for 20 years with AEG Company, which owns the Staples Center last November.
Crypto.com and the FTX cryptocurrency exchange also bought ads for the Super Bowl, the National Football League’s annual championship game in September. The cost of serving ads at this event can go as high as $ 6.5 million.
Bitcoin price rose 60% in 2021 but fell 19% in the last month of the year. Currently, the cryptocurrency is still in a downtrend and is trading at around $ 47,000. However, Michael Novogratz, CEO of investment management company Galaxy Digital, predicts that Bitcoin will not fall below its recent low of $ 42,000 as a lot of money is pouring into the crypto industry.