First Stage Investor

Crypto Flight to Safety

Crypto Flight to Safety
By Adam Sharp
Date October 25, 2018

The crypto market has been holding up incredibly well over the last few months. It’s impressive, especially considering that markets have been dumping so-called “risk assets” like growth stocks.

Tech stocks have been getting ripped up lately, but crypto has been steady through the storm so far. The market has absorbed oncoming newly mined coins and other sellers well. My theory is that bitcoin, and crypto in general, may be becoming a speculative “flight to safety” asset. Kind of like gold, but with more risk and more potential reward.

Everybody’s suddenly worried about growth stocks. But they’re also worried about bonds, since interest rates are expected to rise, which will adversely affect the prices of existing bonds.

Everyone’s hoping that the stock market bull run will resume, but if it doesn’t… I think crypto could be one of the assets that money flows into.

This is just speculation, and we’ll see how it plays out. Either way, I’m bullish on crypto here, especially bitcoin (BTC).

The primary near-term catalysts are Fidelity launching a new crypto division and ICE (Intercontinental Exchange, the NYSE’s parent company) launching Bakkt. Both are built for institutional investors (big financial firms of all sorts – hedge funds, pension funds, endowments, money managers, etc.).

Now it depends on how well these firms can sell this new asset class to their clients. I think they’ll find success, especially in chaotic times in traditional financial markets. Central bank and government recklessness around the world has created an unstable monetary and debt situation. Unfortunately, there’s still plenty of chaos on the horizon.

I believe our portfolio’s well-positioned for this market. As you know, I’m especially bullish on bitcoin over the next six to 12 months, as it will be most new crypto investors’ first large purchase.


Adam Sharp
Co-Founder, First Stage Investor

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