Are we witnessing the dawn of a new stock market?
Is right now the very best time to get in on the next big revolution in money… at its very infancy?
There are some interesting clues that beg us to pay attention.
We’ll start with what can only be described as an insatiable appetite for Bitcoin – not just from speculators, but from Wall Street’s biggest buyers.
The latest proof of soaring demand comes from the folks at Goldman Sachs.
“All of our institutional client discussion is really focused around Bitcoin,” said Mathew McDermott, the head of the company’s digital assets division.
The group recently surveyed hundreds of big-name groups – hedge funds, insurance companies, pension funds and corporate treasurers. It found what our volume indicators have been telling us for months.
“In terms of institutional demand,” he said, “we have seen no signs of that abating.”
Here’s the kicker…
He says the groups that are piling into cryptocurrency are doing it for all the reasons we’ve outlined – negative interest rates and fear of the dollar’s demise.
Some 40% of clients surveyed already have exposure to crypto. That means billions of dollars of cash that would have otherwise been devoted to stocks, bonds and an array of derivatives has flowed into Bitcoin and its brethren.
According to Goldman, 76% of those folks say Bitcoin could reach $100,000 this year.
The importance of those two ideas cannot be overstated.
A REVOLUTION IN MONEY
What we’re seeing from these giant investors is much bigger than crypto or the notion of digital money.
It’s a full-on revolution… a once-in-several-generations rollover of the entire system to something different.
Take the action from special purpose acquisition companies (SPACs) over the last year.
Talk about a slap in the face to the current system. These SPACs are sidestepping the traditional IPO process – filled with red tape and hugely expensive procedures – and bringing billions of dollars in fresh capital to private firms.
They’re also bringing some of the biggest and brightest names in finance.
Last year, more than 50% of firms going public went the SPAC route… generating $80 billion in proceeds versus the $67 billion brought in through traditional means.
Again… it’s a revolution.
But what happens next will not only meld these two trends but also make their growth so far look like mere pregame warmups.
A NEW WAY TO INVEST
Blockchain-based offerings (BBOs) are already here in some small forms… but they’ll soon get much bigger.
If you’ve followed the space, you’ve likely heard of initial coin offerings (ICOs). They have good intent, but their timing has been flat-out lousy. Many launched at the top of the craze in 2017. They attracted bad actors. And they failed to offer anything of real value.
But this is where we must remind you of the facts from the top.
In 2017, the big boys of Wall Street weren’t in the game. Back then, it was a realm of speculators and the pitchers of get rich quick schemes.
Times have changed.
Keep your eye out for something in the headlines called security token offerings (STOs). We’ll start to see more of them later this year.
They’re very similar to traditional initial public offerings (IPOs) but are based on the blockchain. They offer investors real equity in real companies.
The industry tends to call them “everyman IPOs” since they are open to all investors… not just wealthy accredited investors.
So far, these offerings have been quite small… the largest raised just over $130 million.
But that will change. Singapore has already created an exchange for STOs. Nasdaq-listed companies have turned to them. And Japan appears to be jumping into the trend in a big way.
They’re the future of the system… and will mark a major transformation away from traditional stocks to blockchain-based tokens.
Our job as investors is to put the clues together to uncover what happens next.
Given the evidence in front of us, it’s quite difficult to envision a financial market that does not evolve to include crypto in a big way.
The old system is manipulated and untrustworthy. Institutions are pouring in. And the boom in SPACs proves the market is clearly looking for a different and better way.
Soon, cryptos won’t be a tool for speculators and techno dreamers. The blockchain and the tokens on it will represent some of the biggest businesses on the planet.
It’s where the money of the future will be made.