Nick’s Note: Regular readers know former Wall Street executive and hedge fund manager Teeka Tiwari is widely considered one of the top cryptocurrency analysts in the world. No one in our business is more plugged into this space than he is.
Last week, Teeka attended the Consensus: Invest conference in New York. And by the time you read this, he’ll be in Bogotá, Columbia, at the Latin American Bitcoin & Blockchain Conference. I got a chance to catch up with him in between events.
Below, Teeka tells me why even he underestimated the institutional interest in bitcoin… and why this means you should add (or continue to add) some bitcoin to your portfolio today. He also reveals where he thinks bitcoin’s price is headed in 2018…
Nick: T, you just left Consensus in New York… It’s one of the biggest cryptocurrency conferences in the world. What was it like?
Teeka: The energy there is incredible. It’s exciting. And all these guys want to network… get to know each other, and talk cryptos.
It’s a new field and there are no established players yet. And if you’re not out there networking, you’re going to be left behind.
I only planned to stay one night… But I stayed longer. I kept getting invited to private events hosted by hedge funds and initial coin offering (ICO) projects. I find some of my best ideas at these events.
One party I attended was hosted by Mike Novogratz. He’s the manager of the biggest crypto hedge fund in the world. And he was one of the first Wall Street guys to realize the importance of cryptos.
A couple years ago, Mike invested $500,000 in ether when it was under $1 per coin. He’s been following the space for a while.
So, I wasn’t going to turn down an invite to his party.
Nick: Who attends a cryptocurrency party?
Teeka: This one had a lot of young entrepreneurs. But these weren’t your typical, foolhardy young entrepreneurs. These were really sophisticated guys. What was different about these guys from other entrepreneurs I’ve seen in the past is they already have existing businesses.
One young man I met has 300,000 users on his blockchain application. Another person had 200,000 people on his platform. This is a big difference from the deals we’ve seen so far, which have been little more than a good idea and a white paper.
The quality of projects coming to market in 2018 is very high.
Nick: What does that mean for investors?
Teeka: It means there will be a lot more opportunities to profit from cryptocurrencies.
And the big boys are taking notice. They’re excited about these new projects.
Over 1,700 people attended this conference. And most of them were from hedge funds, venture capital firms, family offices, and endowment funds.
These are all people who are slinging around billions of dollars. And they’re all excited about investing in the cryptocurrency market. They wanted to meet these young entrepreneurs.
That’s the biggest thing I noticed… the amount of institutional demand for cryptocurrencies that’s out there.
I vastly underestimated how badly institutions want to get into this space… vastly underestimated.
Nick: How’s that possible? You’ve been talking about the tidal wave of money coming into cryptos all year.
Teeka: It’s not going to be a tidal wave… It’s going to be the biggest ocean of money in the history of the world.
And that money hasn’t even hit the markets yet. The opportunity in cryptos is just beginning.
But back to your question. Here’s why institutional demand is much bigger than I initially thought…
These institutional investors will be able to trade the new bitcoin futures contracts later this year. But that’s not the same as owning physical bitcoin. Right now, they can’t own bitcoin because of an issue called “custody.”
You see, these large funds can’t hold onto their own investments. Most of them have contracts that state a third party will hold onto their assets as a custodian. This rule is in place to protect investors from potential fraud.
So, these funds have institutions like Morgan Stanley or Goldman Sachs have “custody” of their investments.
There are no institutional-grade custodians for cryptocurrencies yet. They need that piece in place before they can put money to work in the actual bitcoin market.
Think about it being the difference between owning a futures contract on gold and actually owning gold bars.
A futures contract can be held in a brokerage account whereas a gold bar needs to be held in a physical vault. As I said, right now there are no bitcoin “vaults” approved for institutional use.
The good news is that will change next year. A slew of new companies is rising up to meet the custody challenge.
Once custody is in place, the stage will be set for institutions to trade in the physical bitcoin market. And when that happens, billions—or even trillions—of dollars will be flowing into the space.
And I hope everyone has an allocation to bitcoin before this money flows in. The move is going to be huge.
Nick: What will all this institutional money do for the price of bitcoin?
Teeka: I recently told my Palm Beach Confidential subscribers that bitcoin will reach $25,000 next year. And I am very confident it will reach that point.
Some analysts at the conference project a bitcoin price of $300,000 by 2022. That’s not unreasonable.
So, my price may be on the conservative side.
Nick: Thank you for talking to us again, T. Have fun in Bogotá.
Teeka: No problem.
On January 1, 2018, recreational marijuana will be legal in California. And that will unleash a $50 billion industry.
No matter how you feel about legal weed, this is an investing opportunity that comes around once in a lifetime. Here’s how you can play it.