Lex Sokolin is the Global Director of FinTech strategy at Autonomous Research. He helps financial services senior executives, board members, startup operators, hedge funds, and venture investors make strategic decisions about FinTech, Cryptocurrency, and Innovation.
In the 21st century, cryptocurrency is very controversial given its new technology which people know very little of but it is really here to stay, says Lex Sokolin.
In his expert opinion, he says the underlying technology is really fundamental for the types of companies people are building right now. For any person who is thinking about investing in Bitcoin, the understanding of what Bitcoin refers to is very important. He must understand how the blockchain works and also understand how payments work.
He further says an investor must know whether Bitcoin is fulfilling the promise of enabling digital payments. The price is very volatile in the market. Therefore, an investor must not go and fill his whole portfolio with cryptocurrencies but it is a good alternative to add to his general allocations. The total investment in cryptocurrency in the portfolio must be around three to five percent.
Lex Sokolin says:
“For advisors when you think about cryptocurrencies. Your clients are going to buy Bitcoin whether you like it or not. So you can choose to say that this whole thing will fall apart not get educated on it, not help people but that’s really irresponsible.”
The advisors should start understanding the basics of how the blockchain works, understand why there are differences between the cryptocurrencies. For example, what is the difference between a payments coin like Bitcoin and Ethereum which is a smart contracts platform? All these things are different.
The advisors have to spend the time to formulate simple answers to the clients’ questions which can better the understanding of the client before investing and give them a logical reason to invest so that they can help the clients make sense of this new technology.
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Bitcoin will likely be valued at $100,000 with a market cap of over $2 trillion before the end of 2021
The entire cryptocurrency market seems to be on the brighter side of the market since the beginning of the year. A majority of the coins have recorded significant recoveries from their 2018 slump, a period during which most coins lost over 90 percent of their value, when compared to their all-time highs. Among all the coins in the market, Bitcoin [BTC] aka the digital gold, was noted to be making a massive comeback as the coin breached the $11,000 mark after nearly 15 months. The coin however, soon retracted to settle below the $11,000 level.
According to CoinMarketCap, at press time, Bitcoin was trading at $10,887.27 with a market cap of $93.549 billion. The coin recorded a 24-hour trading volume of $20.757 billion for the past 24 hours and saw a massive rise of over 17 percent over the past seven days.
Anthony Pompliano, Co-founder of Morgan Creek Digital Assets, predicted that the largest digital currency could rise to reach $100,000, before the end of 2021. Pomp added that he was around 70-75 percent confident in this prediction. He stated,
“As I have previously said, making predictions is difficult […] Part of my process as a professional money manager is forming a thesis (price target), identifying a timeline (date), and establishing a confidence level. And then constantly re-evaluating those three aspects of my thought process as I receive new information.”
Pomp however, listed six pointers that have to be understood beforehand. First, this prediction is not an investment advice, and people should do their own research before investing in the digital currency. The second is with respect to Bitcoin’s volatility, with Pomp remarking that since it was a highly volatile market, the coin could witness a significant fall before being valued at $100,000. He stated,
“I anticipate that there will be numerous 20-30% drawdowns from new all-time highs as the asset continues to appreciate in value. These mini-boom/bust cycles should not cause panic, but rather need to be understood as natural market dynamics whenever an asset gains significant value in short periods of time.”
Further, the partner of the investment firm stated that the rise would be driven by several catalysts. This includes institutional adoption, exchange-traded funds and retail product approvals, global instability, governments all across the globe manipulating currencies, markets and economy. He went on to state,
“The market cap of Bitcoin will reach $2+ trillion when Bitcoin is worth $100,000. This is less than 1/3 the market cap of gold and less than 1/40 the global money supply.”
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