How some retail investors view crypto now

00:00 Speaker A

Bitcoin touching a record earlier today, popping over a hundred and twenty-four thousand two ten before trending lower, cryptocurrencies have been on a tear of late, benefiting from policies out of the Trump administration and more mainstream adoption. Soon, Americans may even find crypto in their 401Ks, but 48% of Investopedia readers say crypto may be overvalued here, the asset ranking just below AI stocks in a new sentiment survey. Caleb Silver, still with me here, Caleb. Let’s start there. Investopedia fans, how do they feel about crypto?

00:35 Caleb Silver

Yeah, still skeptical. That said, more readers than ever own it than used to. We have about 27% of our survey respondents saying they now own cryptocurrency, most of that is in Bitcoin and it seems kind of irresistible when you look at the price trends. I just did a thing looking at the 10-year track record, it’s up 44,400%. How are you doing? Are you not entertained? But the streets are paved with crypto in Washington D.C. This is what the administration wants, even though Treasury Secretary Bethan saying they don’t intend to buy Bitcoin for the strategic reserve.

01:29 Speaker A

But on that Bethan headline, in your opinion, big deal, no deal, were you surprised by that?

01:37 Caleb Silver

I was happy by that. I really don’t want our treasury buying Bitcoin out on the open market. That said, he did say that the US has some $19 to $20 billion worth of Bitcoin from all those asset seizures. So we don’t necessarily want that in as a growing part of our reserves, especially if we’re going to be dollar denominated going forward. And I think when you think about who owns Bitcoin, most of the Bitcoin is owned by about 50 whales out there and having the US insert itself into that conversation in a bigger way, probably not a great strategic policy move. That said, we are going to see Bitcoin in our 401Ks. You can already buy it tangentially through the spot Bitcoin ETFs or by investing in a microstrategy.

02:41 Speaker A

Is that a good thing? More options, more choices for people?

02:45 Caleb Silver

In a way, you get more diversification in your portfolio and the potential for more upside. You also get some potential hand grenades in there that could blow up and you have to have a very strong stomach for investing in Bitcoin, especially for the long term and be ready to deal with the dips. But if you’ve had it in there even as a 5% allocation in your portfolio over the last 5 years, it’s helped quite a bit even though it’s put you through some nauseating moments. And the fact that we’re also going to get private equity in there, also another risky asset by definition with less transparency. This is a time more than ever that investors, long term and retirement investors need education because a lot of people still don’t understand these asset classes and what they can do inside a portfolio.

03:43 Speaker A

The recent move higher in Bitcoin, what would you chalk that up to Caleb? Would you say that’s the regulatory backdrop getting friendlier? Is it institutional demand? What is it?

04:00 Caleb Silver

Yeah, all of the above. And the fact that institutions really haven’t totally embraced yet outside of the Black Rocks of the world that have some $75 billion with the Bitcoin. Fidelity, we know, has been deep into Bitcoin for a very long time, but you’re going to start to see the traditional asset managers start to offer it more, start to offer more options in investing in cryptocurrency, particularly Bitcoin. There’s that. There’s the fact that if you’re looking at the regulatory highway, all you see is green lights from this administration. They want to be in it, they’re in it themselves and we know it’s going to be a broader part of the capital market. So people need to understand that this is where it’s going to go, whether or not it’s backed by anything or what happens if you lose your crypto. All those questions about the security of crypto and Bitcoin itself still remain in question, which is why more than half the country still is very skeptical about it, if you look at the results.

05:11 Speaker A

And you own Bitcoin, be clear.

05:15 Caleb Silver

Of course. I’ve been buying it and I’ve been buying it for years. I wish I would have bought more of it for years, like a lot of other people. But I want to understand the asset class. I want to understand the way it works. I want to understand how it actually fits into my portfolio and what happens when we get a big surge like the one we did? How does that change my risk profile when I’m looking at my retirement portfolio?

05:44 Speaker A

One question for you, in terms of the role Bitcoin plays in a portfolio, Mike Novogratz puts it like this. He says it’s digital gold. I’ve heard Novogratz say that it’s digital gold. Don’t overthink it. It is simply, Novogratz argues, it’s a hedge against irresponsible fiscal policy the world over. Is that how you see it?

06:12 Caleb Silver

That’s one of the ways that I see it. I also see it as a potential upside trampoline when I, you know, when they need better performance. Sometimes it’s coming out of cryptocurrency, but it is a small percentage of my portfolio. I’ve made a rule to never make it over a certain amount in terms of percentage, uh, in terms of its weight in my portfolio because I have other things that I need to worry about here. And it’s still being developed, it’s still mysterious. But it is one of those scarce assets. It is the OG of cryptocurrencies. It’s not like it just got here. It’s just going to get a much more hospitable environment in this country to be a part of our capital markets one way or the other.

07:05 Speaker A

Digital gold, upside trampoline.