Barbarians at Bitcoin’s Gate
On this day in 2017, bitcoin reached a new high of $19,891.
It was the culmination of an epic 20-fold rally. In just nine months, bitcoin skyrocketed from $1,000 in March 2017 to nearly $20,000.
Bitcoin mania was everywhere.
It began 2017 as an obscure alternative cryptocurrency promoted by Libertarians and cyberpunks. It ended the year on the cover of financial news magazines.
Financial news networks had their own segments dedicated to cryptocurrencies. Yours truly was featured on a show called Crypto Craze on Cheddar TV.
In 2018, the mania faded as quickly as it arrived.
Over the next year, bitcoin dropped 84%. It went from the toast of the town to a public pariah.
The fast-money investors fled for cannabis, cloud and meat-alternative stocks.
Crypto conferences, which were once at full capacity, had trouble selling tickets. Nobody even wanted to admit they owned some.
But bitcoin didn’t disappear. And, as they say, what doesn’t kill us makes us stronger.
In the last three years, bitcoin and other cryptocurrencies have continued growing at a rapid pace, readying themselves for mass adoption.
This year alone, companies such as MicroStrategy and Square have added bitcoin to their balance sheets, while hedge funds have been actively trading bitcoin futures.
But last week’s news of a bitcoin purchase by one of the oldest American insurance companies sent shockwaves through the financial markets.
It also solidified bitcoin’s role as an asset class that’s here to stay.
A New Player in the Bitcoin Market
Massachusetts Mutual Life Insurance Co., founded in 1851, is not a new-wave insurance company.
In the 19th century, the insurer grew by selling high-premium insurance policies to railway and steamship workers, gold rush adventurers and people relocating south of the Mason-Dixon Line.
It survived the Civil War, two world wars, the Spanish influenza and the Great Depression by diligently matching liabilities with assets.
As of September 30, the insurance giant had $235 billion in assets under management, making it the eighth-largest life insurance company in the U.S.
It’s also the first life insurance company to add bitcoin to its assets under management. And it won’t be the last.
Last week, MassMutual announced it has purchased $100 million in bitcoin. It also made a $5 million equity investment in NYDIG, a firm that provides institutional investment and custodial services for cryptocurrency.
This was one small purchase for MassMutual, one giant leap for bitcoin.
The Next Wave of Crypto Fortunes
Wall Street is already warming up to increased crypto adoption as an asset class.
On Monday morning, JPMorgan’s strategists commented: “MassMutual’s bitcoin purchases represent another milestone in the bitcoin adoption by institutional investors. One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example.”
JPMorgan’s strategists also said that if pension funds and insurance companies around the world allocated 1% of their assets to bitcoin, it would equal a $600 billion investment.
To put this in perspective, bitcoin’s current market capitalization is about $356 billion.
Of course, this won’t happen overnight. But it will keep a bid under bitcoin and other cryptocurrencies for the next decade.
And that means bitcoin’s old high of $20,000 will soon be a thing of the past.
That’s why I put together a special cryptocurrency presentation to talk about how you can invest in the sector right now.
Editor, Automatic Fortunes