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Bloomberg Best of the Year 2017: Eugene Mutai, a bitcoin 'miner' and software developer, poses for a photograph with cryptocurrency 'mining' machines at his home in Nairobi, Kenya, on Saturday, Sept. 9, 2017. Photo: Bloomberg

Can bitcoin be the FAANG stock of the next decade? One money manager thinks so, but it takes more than Reddit to get it there

  • Bitcoin was last trading at US$32,129 on Friday, almost US$10,000 lower than its record high of US$41,000 earlier this month
  • Skybridge is headed by Trump’s former communications director Anthony Scaramucci
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 round table 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 US$5,000 and US$50,000, or it could grow to be a “real asset” that could easily hit as much as US$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 US$32,129 on Friday, almost US$10,000 lower than its record high of US$41,000 earlier this month.

“It’s now a US$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 US$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 US$7 billion Registered Investment Adviser (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 cryptocurrency-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.”