Bitcoin could be like the FAANG stocks for the next decade – but it will take more than the buy-in of the retail army to get it there, an investment chief says

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“It’s going to require institutional capital.”

  • Bitcoin could become the next “great tech stock” of the coming decade, an investment chief said.
  • But only retail traders buying into the coin won’t be enough, according to Skybridge’s Brett Messing.
  • “It’s going to require institutional capital,” he said. “Retail can’t get it there.” 
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Bitcoin could become what Tesla, Facebook, and Google were for the last decade, according to Brett Messing, partner and chief operating officer at Skybridge Capital.

The investment chief explained that just like three of those tech stocks were some forms of networks, bitcoin too is a monetary network. 

“Bitcoin is actually going to be the great tech stock over the next decade, in addition to being digital gold,” Messing said at a virtual roundtable discussion this week.

According to him, there are two potential outcomes for the digital token in the near future: either it could remain a niche asset and trade between $5,000 and $50,000, or it could grow to be a “real asset” that could easily hit as much as $500,000. 

But in order for it to get to even a quarter of that level, “it’s going to require institutional capital,” he said. “Retail can’t get it there.” 

Bitcoin was last trading at $$32,129 on Friday, almost $10,000 lower than its record high of $41,000 earlier this month.

“It’s now a $600 billion asset class. I think it is arguably beyond the point at which it can be manipulated, and I think as it matures, that will become increasingly the case.”

SkyBridge Capital, run by hedge fund manager Anthony Scaramucci, invested $25 million into a bitcoin-focused fund that went live on January 4.  The “SkyBridge Bitcoin Fund” was launched so that the fund got in before bitcoin’s price soars even higher.

The firm’s flagship fund is a $7 billion Registered Investment Advisor (RIA), but for the purpose of managing the bitcoin fund, it isn’t acting as one. “By doing that, we don’t have to satisfy what’s called a custody rule under the Advisers Act,” Messing said, referring to the issue of custody service by hedge funds who hold large amounts of cryptocurrency.

But he expects Gary Gensler, President Joe Biden’s pick to run the US SEC, to be “very bitcoin-friendly,” and that one of his first acts will be to provide clarity on the custody role.

In terms of risks to bitcoin, government regulation is by far the biggest. Just like it is for technology companies.

Messing said: “If you talk to… what is Mark Zuckerberg worried about? What is Jeff Bezos worried about? The thing they worry about the most is the government, and that’s the first concern.”

A breakdown in infrastructure is another point of concern since bitcoin makes big moves everyday on exchanges that could falter.

Lastly, there could be a greater risk that no one is prepared for.

“We’re trying to be crypto-hip, but whoever knew that we’d be sitting here in a pandemic on Zoom?” said Messing. “No one predicted this. I imagine the risk for Bitcoin is one that none of us are going to identify.”

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Anthony Scaramucci’s SkyBridge hedge fund just invested $25 million in a bitcoin fund as it sees an ‘avalanche of institutional investors’ buying crypto in 2021

Anthony Scaramucci
  • Anthony Scaramucci’s SkyBridge Capital just launched a bitcoin fund and invested $25 million of capital. It will go live to outside investors in 2021.
  • After bitcoin’s 200% rally this year, investors may be hesitant to buy bitcoin at current levels. But Scaramucci told CNBC the coin is in its “early innings,” and he wants to get in before the price soars even higher. 
  • “We could be at the precursor of an avalanche of institutional investors heading in,” Scaramucci said on Tuesday.
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The latest institutional investor to dive into bitcoin is SkyBridge capital, Anthony Scaramucci’s hedge fund. The $9.3 billion firm filed an SEC form D on Monday to launch the “SkyBridge Bitcoin Fund L.P.”

Scaramucci told CNBC that the fund started trading on Tuesday with $25 million of SkyBridge’s funding, and will go live to outside investors who can invest a minimum of $50,000 on January 4.

After bitcoin’s 200% rally this year, investors may be hesitant to buy the cryptocurrency right now in fear that a post-rally pullback is on the way. But Scaramucci said bitcoin is in its “early innings,” and he wants to get in before the price soars even higher.

“We could be at the precursor of an avalanche of institutional investors heading in,” Scaramucci said in a Tuesday CNBC interview. He added there may be a large swath of investors buying bitcoin in the first quarter of 2021 because they didn’t want to put it on their balance sheets in 2020.

Read more: The CIO of a new crypto fund that has returned 220% to investors this year explains why bitcoin topped $20,000 for the first time ever this week – and shares another digital currency set to become the ‘asset of the year’ in 2021

The SkyBridge Capital founder also said bitcoin will be a “very strong asset class” over the next decade given the monetary supply and current central banking coordination. 

SkyBridge joins a growing group of institutional players that are acknowledging bitcoin’s legitimacy as a store of value. Last month, Guggenheim filed to reserve the right for 10% of its $5.3 billion Macro Opportunities Fund to invest in the Grayscale Bitcoin Trust.

Other firms like MassMutual have invested in the cryptocurrency as well. Meanwhile, billionaire investors such as Stanley Druckenmiller and Paul Tudor Jones have  publicly discussed their bitcoin purchases.

Read more: BANK OF AMERICA: Buy these 16 medtech stocks with strong fundamentals that are set to soar post-pandemic

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