Can Bitcoin keep heading higher? Well Ric Edelman thinks so.
Edelman, founder of The Digital Assets Council of Financial Professionals, joined TheStreet to explain his bull case for the cryptocurrency.
Related: Struggling bitcoin company files Chapter 11 bankruptcy
Full Video Transcript Below:
CONWAY GITTENS: Where do you see bitcoin headed in 2025?
RIC EDELMAN: I see it going higher. I’m on record as suggesting that by the end of the decade, bitcoin will be $420,000. I believe bitcoin is going to rise eightfold over the next six years, far outpacing the performance of any other asset class. So I’m a strong believer that you should have a 1 or 2 or 3% allocation in your portfolio to bitcoin and ethereum because I think it’s a good diversification tool and you have a very high potential for outperforming the markets. And if it doesn’t go well, it’s only 1 or 2% It’s not going to cause you irreparable financial damage. So I think too many people don’t know enough about this and they are missing the opportunity that is available.
CONWAY GITTENS: I’m going to get back to the portfolio percentage in a minute, but I can’t just let you go with giving us a big number like that, 420,000 for bitcoin. How do we get there? What is the what is the catalyst to move bitcoin prices from where they are now to your target?
RIC EDELMAN: Well, take a look at the world’s total wealth. If you add up the total value of all the money in the world, the total value of stocks and bonds and real estate and gold and oil, et cetera, it all adds up to somewhere about seven 7 and 1/2 or 70, $80 trillion of value. We are recommending roughly one 2% of assets in crypto. If everybody in the world who owned all those assets were to allocate just 1% of their portfolio to crypto, we’d be talking about a $7 trillion infusion of capital into the asset class. We know there’s only 21 million bitcoins that will ever be created. 19 million of them so far already have. So you do the simple arithmetic. 19 million bitcoins into 7.5 trillion of asset flows.
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That translates to about $420,000 per bitcoin. So we believe that over the next five years we’re going to see greater institutional engagement. You’re going to see endowments, pension funds, sovereign wealth funds, family offices, hedge funds engaging in asset allocation, including crypto in their portfolios. We’re already beginning to see this. Half a billion people worldwide already own crypto. We’re seeing pension funds and endowments already engaged. Now that the bitcoin ETFs and Ethereum ETFs are available in the marketplace here in the us. So as this adoption grows, since the supply is fixed, the increased demand will translate into a radically higher stock price or price for bitcoin.
CONWAY GITTENS: So you mentioned the rise in the price of bitcoin, but man, when the price drops, it really does drop. So what’s your sales pitch to clients? Crypto, of course, is a shiny new thing, but the volatility on that thing is through the roof. That volatility might be too much for most investors.
RIC EDELMAN: You’re absolutely right. This is an extraordinarily volatile asset. It had seven times. It has lost 70% or more of its value. So it is ridiculously volatile. This is the way it is for any new technology. Go back to Amazon. Look at its first 15 years of life. It had the same level of volatility. This is not uncommon within the tech stock world, so you need to recognize that fact. You need to decide, as you just pointed out, do you have the stomach for that volatility? Is this something you want to have as part of your portfolio? If you can handle the volatility, if you can be a long term investor realizing that in the end, high volatility can translate to high profit while also running the risk of high loss, that’ll help you decide whether or not you should do this. And it’s a big part of the reason I recommend only 1 or 2 or 3% Don’t put 10 or 20 or 30% of your money in this. It’s way too volatile and too risky. But 1 or 2% I think most people can tolerate that.
