The motivation and time horizon to enter Bitcoin (BTC) will ultimately dictate whether investors succeed in this new asset class, according to crypto pioneer Mark Yusko.
The CEO of Morgan Creek Capital Management commented on the recent wave of negative headlines regarding Bitcoin on Friday. In a series of tweets, Yusko said financial institutions are rightly concerned about the disruptive impact of Bitcoin and will use whatever means they have to slow its adoption.
The normal response to the threat of Bitcoin is to “put up barriers to adoption and innovation,” Yusko said, adding:
“When threatened, incumbents always look to the influence of governments to try to slow the adoption of new technologies through onerous regulation.”
In the end, it was “a losing strategy for centuries,” he said.
In the meantime, speculators looking for short-term exposure will continue to influence the price of Bitcoin by reacting to the headlines. They haven’t been short of negative news in recent days, with China seizing $ 4.2 billion in crypto assets and Coinbase’s Brian Armstrong announcing potentially damaging Bitcoin regulation.
However, he believes investors with a longer time horizon are more likely to be successful as Bitcoin’s fundamental narrative strengthens:
“Investors are long-term value-driven holders and speculators are short-term price-driven holders”
Bitcoin holders are known for their low time preference, which means they postpone immediate gratification for long term gain. In this case, the “long term gain” is a paradigm shift in society’s understanding of money.
Bitcoin holders, or HODLers as they are known, appear to have strengthened their conviction amid the latest market meltdown. Case in point: 61% of Bitcoin’s supply hasn’t budged for over a year, although BTC has been profitable for over 99% of its history.
Price wise, Bitcoin peaked north of $ 19,200 last week. In the process, BTC’s market capitalization soared to $ 352 billion; a new absolute record. The asset is currently trading below $ 17,000 after a sharp correction on Thursday.