Professional Investors' Stance on BTC
People who understand money – those who make their living through investments – are taking Bitcoin very seriously. They see an opportunity, though, governed by caution. Investors in the UAE have summed up the market and investor concerns quite succinctly.
The process with investors, as typical, started with awareness. Then, with a cautionary dip of the toe, into the market. Getting into an unfamiliar market is often based on a referral by someone who's entered the market first. Given the proliferation of market entrants, this base of first time investors, is growing. So is the pool of referred entrants. No one wants to miss an opportunity – but no one wants to get burned either.
Pro or Not – What's the Difference?
The difference – between non-professional investors and professional investors – is mindset and experience. Non professional investors generally rely on 3rd party accounts in the news – good or bad. They rely on friends and family – and frequently take action based on either emotion or on the advice of an authority figure in their lives. They don't act based on research or personal experience – in a dispassionate way – as do the pros.
Professional investors are pragmatic. They've had successes and failures. They also have the tools to make assessments of an opportunity, so they can weigh up the risks, against the potential opportunity. They also understand that there's no opportunity without risk. So it always comes down to their personal perception of the the immediate and future risks versus potential reward.
Take Aways From Gulf News Interview on BTC
Here are the highlights of an interview conducted by Gulf News. Our comments are highlighted.
A basic driver behind professional interest is the search for an alternative to the dollar and to gold. Bitcoin is considered to be a good alternative. These are individuals and not institutional investors.
Another attraction to Bitcoin is that this fiat currency alternative is not controlled by any government or regulator, which means it's politically neutral, since governments are taken out of the equation. Something private investors are also very attracted to.
The general view is that investing in Bitcoin is currently the best ROI for retirement, since the expectation is that within 10-15 years cryptocurrencies will become part of mainstream society. Also, the future valuation consensus is at over $500,000 per Bitcoin.
There are two issues with which investors are struggling. Volatility and compliance – regulation. But they understand that volatility is the primary source of potential profit. There's also talk of “the bubble”. Historically speaking, based on any new technology platform, it's likely. But when? And who will survive?
As soon as the general public takes note of anything new at a mainstream level, it's time to get out. And that's when retailers typically enter the market. Once volatility decreases it'll become just another currency/asset/commodity. That's when the potential of “extraordinary profits” will disappear.
There is also the expectation of consolidation. Which is also a very typical part of the evolution of emerging markets and technologies. It's also the forerunner of “the bubble”. So watch for consolidations!
So in a nutshell, the consensus is that Bitcoin – and cryptocurrencies – are here to stay, are attractive, but caution is required.