A cryptocurrency I would buy now

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If there’s one crypto to buy right now, it’s Bitcoin (BTC 6.15%). There is currently a paradigm shift in the investment world, and Bitcoin is the reason for it. Early August, Coinbase (PIECE OF MONEY 7.37%) announced that it is partnering with the world’s largest asset manager, black rock (noir 4.12%), to offer crypto investment services to large institutional investors and high net worth private clients. To translate this into common parlance, Bitcoin is now safe to buy for grown-ups.

Hours after the announcement, wild Bitcoin price predictions started circulating, hitting $773,000 (from around $24,000 today). You had the idea. Coinbase/BlackRock news is so important. In a nutshell, the partnership agreement means that the largest institutional investors – like pension funds, mutual funds, foundations and endowments – can buy crypto, and more specifically Bitcoin. With the potential for so much money to chase, there will be upward pressure on the Bitcoin price. Now is the time to enter, before it is too late.

The Coinbase/BlackRock deal

To understand the magnitude of the Coinbase/BlackRock deal, consider that Forbes called it a “10 trillion dollar earthquake”. That’s because BlackRock manages $10 trillion in assets from some of the world’s largest institutional investors. Even if you take a conservative view, BlackRock clients will likely start allocating a small percentage of their assets (say, 1%) to crypto. Even this small change in allocation could be enough to send Bitcoin skyrocketing. This is because these are large numbers. One percent of $10 trillion equals $100 billion, all of which will seek to find a new home in the crypto world. To put this figure into context, Bitcoin’s total market capitalization is currently around $460 billion.

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Image source: Getty Images.

Of course, not all of that $100 billion from BlackRock will go into Bitcoin, but it’s almost certain that Bitcoin will get the most attention from investors. This is going to have a very real impact on asset allocation, if large institutional investors truly perceive crypto as a whole new well-defined asset class. Large institutional investors focused on traditional asset classes like stocks and bonds. However, in the 1990s they began to shift to riskier asset classes like real estate and private equity, all in the name of chasing returns and hedging overall market risk. This trend continues now with the shift to crypto. These same investors will allocate a tiny portion of their portfolios to crypto, alongside all of their other alternative investments. This is why it is such a paradigm shift: Bitcoin is becoming more widespread for the super-rich and the very big players in the financial world.

The Paradigm Shift on Wall Street

Keep in mind that this paradigm shift is also happening at many major Wall Street banks, not just BlackRock. When Wall Street mistrusted crypto, the result was often fear, uncertainty, and doubt (FUD) in the market by increasing the risk of crypto. But when Wall Street wants to invest in crypto for its clients, it’s a very different picture. Crypto becomes just one more tool to diversify a portfolio and adjust the overall risk-reward profile.

In 2017, for example, BlackRock CEO Larry Fink called Bitcoin money laundering and dismissed it as an asset class. Five years later, he is ready to commit some of the $10 trillion in assets under his management to Bitcoin. When people change their view of the world, they move their money accordingly.

Accordingly, the time to buy Bitcoin is now. Once big institutional investors decide they really want to get in on the Bitcoin action, it will be much harder to get a premium price. It’s not about “buy the dip” and hoping against hope that Bitcoin goes up in price. This is to respond to a major paradigm shift that is currently taking place in the market. The best way to do this is to buy Bitcoin.

Dominique Basulto has positions in Bitcoin. The Motley Fool has positions in and recommends Bitcoin and Coinbase Global, Inc. The Motley Fool has a disclosure policy.

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