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Let’s start with some disclaimers. As of this writing late Friday, bitcoin was approximately 22% removed from its all-time high, putting it in a bear market. It go there with the “help” of a 17% decline in February – its worst monthly performance in nearly three years.
Even if those factors are ignored, the research that will be cited in this article is exceptionally bullish. The historical comparisons audacious. As advisors and seasoned cryptocurrency market participants know, that’s par for the course in this space. Still, the comparisons and findings in a recent bitcoin study conducted by River Financial are worth considering.
That’s not an endorsement of a bearish or bullish point of view on bitcoin and sure, the survey can be taken with a grain of salt because River is a crypto-only firm. Yet even with all the disclaimers and assuming that the firm is only “half right” in its assumptions, the long-term outlook for bitcoin is compelling.
Internet, Social Media Comparisons
No one has a time machine, but if today’s investors could play Marty McFly, chances are a massive percentage would send themselves back to 2001 and buy shares of Amazon. Certainly, plenty more would travel back to 2004 to get some of the Google initial public offering (IPO) while others would go back to 2012 to participate in the Facebook IPO.
Hindsight is 20-20 and while plenty of investors kick themselves over missing out on the early days of those story stocks and others, River makes a case that those early innings are playing out today with bitcoin. Based on the firm’s estimate that entering this year, global bitcoin adoption stood at just 3%, the thesis has validity.
Consider this. As noted by River, that percentage is comparable to internet penetration in 1990, online banking usage in the mid-90s or social media adoption 20 years ago. Throw in the fact that just 4% of people around the world own bitcoin and there is credibility in the early innings argument. What’s interesting about that is helped in part by supply constraints, bitcoin is the world’s 11th-largest currency by market value and it could easily crack the top 10 in a matter of weeks or months. It ascend to that status with the help of professional investors, including advisors, but there’s ample room to grow on that front, too.
“Hedge funds and registered investment advisors (RIAs) collectively manage over $135 trillion in the U.S. alone,” according to River Financial. “While total (bitcoin) exposure exceeds $30 billion, allocation sizes remain relatively small. However, they have increased each quarter since the launch of ETFs.”
Corporate Adoption Could Be Major Catalyst
River Financial points out that in 2024, public and private companies stockpiled an average of 1,000 bitcoin per day. Sure, much of that was attributable to Strategy (MSTR), formerly MicroStrategy, and bitcoin miners, but other firms are getting in on the act, too.
The research firm adds that since 2023, the number of public companies holding bitcoin as a cash alternative surged 139%, but the percentage of those using it as a Treasury asset remains below 1%.
Some corporations are using bitcoin as a new form of shareholder rewards – an alternative to buybacks of dividends.
Even with that, just two members of the S&P 500 and a trio of Nasdaq 100 member firms hold bitcoin on their balance sheets, implying corporate adoption could be a significant longer-ranging driver of upside for the largest digital currency.
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