The Motley Fool, a United States-based financial advice company, announced on February 18 that it will set aside $5 million of its own cash to buy bitcoin, while also saying the crypto has a 10X potential. And that’s a big deal. Here’s why.
First, some background.
In the early days of bitcoin, traditional finance firms and analysts were mostly dismissive of the cryptocurrency’s pedigree as a worthy investment — and understandably so in some instances. While Motley Fool, as a company, hadn’t taken a public stance about bitcoins until now, many of the crypto-related content it has published sparsely regard bitcoin as an investment.
However, the company is now recommending bitcoin in its Discovery 10X service — an advisory service where it recommends investments that have the “potential to deliver 10X return” within 10 to 15 years. Bitcoin is the only cryptocurrency being recommended in a list of 40 investments that could return 10X in 15 years. The other 39 are undisclosed stocks.
Motley Fool’s decision to recommend bitcoin is a big call, given its strong views that holding equities for the long haul is the single best way to build wealth. The company’s stance suggests that, first, bitcoin will still exist in 15 years, and second, the cryptocurrency would already have a significant role in the financial world by then.
Every content that Motley Fool, which has about 90 million monthly readers, publishes contains a disclosure that states whether Motley Fool holds or recommends any of the investment opportunities mentioned. The announcement note about its plan to buy bitcoin is the first time its disclosure line features bitcoin as a recommended investment.
However, the company doesn’t plan to add bitcoin to its balance sheet until all its Discovery 10X members have explored the cryptocurrency as an option for their portfolio, CEO Tom Gardner said in a promotional video about the service.
What’s Motley Fool’s Bitcoin Investment Thesis?
Gardner, in the promotional video, outlined his firm’s beliefs about bitcoin as outlined here.
Bitcoin as a hedge against inflation
Gardner said: “I believe that bitcoin does provide what I believe to be a very worthy hedge against the risk of inflation — the risk of the decline in [the] value of the US [dollar] and currencies around the world.”
“As we fight our way through covid-19 and deliver necessary relief packages that are also necessarily inaccurate. It’s [the relief packages] a blunt solution and therefore it does put the value of existing currencies at risk.”
Here, Gardner was referring to the substantial minting of new money by governments to help sustain the economy as the covid-19 pandemic lingers. In the U.S., for instance, nearly 20% of all dollars were created in 2020. That’s the largest increase in dollar supply since World War II. Experts expect this to ultimately result in inflation — which would reduce the dollar’s buying power.
Bitcoin and its much-storied supply cap “provides an excellent hedge against that,” Gardner added.
Bitcoin’s use as a medium of exchange expected to rise
Bitcoin’s original purpose is to be a peer-to-peer money network that doesn’t require intermediaries (like a bank or payment processor). But this use case is limited right now — with the crypto largely treated as an investment. Motley Fool expects that bitcoin will start serving its original purpose as its price becomes stable.
“I do believe that if the price of bitcoin stabilizes over time, it could become more of a medium for transactions. We’ll see that might take seven years might take 12 years to play out,” Gardner added.
Bitcoin will interest digital natives
Digital natives describe the generation of people who grew up exclusively in the digital age. That would include a large portion of the Gen-Z population — and everyone in the next generation batch. This population of people will continue to expand, and Gardner believes that their digital-only reality would make digital currencies less of an alien idea as opposed to the generations before them.
“I think the world that we’re moving into is much more digital, and we should expect future generations to be more interested in digital currency as a store of value than gold,” he said.
Motley Fool Expects Bitcoin to reach $150,000
Gardner expects these factors, put together, to propel bitcoin “to $150,000 and beyond in the years and decade to come,” adding that every portfolio should hold between 1% and 3% of bitcoin.
Motley Fool is joining a growing list of traditional finance companies that are starting to view bitcoin as an investment. More recently, global asset management firm Blackrock
BLK
, which has $8.7 trillion in assets under management said it has started exploring bitcoin in some capacity.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
