Bitcoin’s real adoption level is much lower than most expect, and that means its potential upside is much higher, or at least that’s what Andy Edstrom, head of Swan Advisor Services at Swan Bitcoin says.
Edstrom has 20 years of experience in the industry, including working as an analyst for Rothschild and Goldman Sachs and moving on to becoming the managing director at Swan bitcoin, and the financial advisor at WESCAP Group (an investment advisory firm). Let’s take a look at what he has to say.
What does ‘Real Bitcoin Adoption’ look like?
Edstrom touches upon the Biden administration’s statement on March 9th, in which they stated around 40 million Americans, or 16% of the total U.S. population, have reportedly invested in, or are trading crypto.
Source: Billboard
This statistic echo results from a Grayscale Research report that stated that 26% of Americans own Bitcoin (BTC). It also aligns with a 2021 survey by Bitcoin investment firm NYDIG that revealed 46 million Americans or a fifth of American adults, own Bitcoin.
Even the latest statistics in Australia show a surge in crypto ownership, with Finder revealing that 1 in 5 Aussie adults owned crypto and that 65% of that figure also owned Bitcoin. Similarly, a survey by the Independent Reserve’s Cryptocurrency Index (IRCI) showed that the number of Australians owning crypto has risen to 28.8% (around 1 in 4) – up from 18.4% in 2020.
Edstrom states with dismay that many people use statistics like these to mistakenly assert that Bitcoin adoption has grown to over 15%. In his view, this assertion completely misses the mark. He explains that adoption shouldn’t account for minor, perhaps even negligible, investment quantities. He goes on to say:
“With bitcoin, adoption means recognizing bitcoin’s role as the world’s best hard-money asset – a monetary asset with a strictly limited supply. It means recognizing bitcoin as the best risk-adjusted and most liquid investment opportunity today. It means realizing that bitcoin is on a path to potentially becoming the world’s most valuable system for value storage and transfer.”
He believes that real Bitcoin adoption should only factor in for those that have put in 20% or more of their net worth into Bitcoin and that the segment of the population that has adopted the crypto under these connotations is likely only 2%. This stance isn’t unfounded – in fact, advice from mainstream investors over the past few years often have one thing in common: “Only put a small fraction (AKA less than 20%) of your net worth into Bitcoin.”
Source: Forbes, Time, EconomicTimes, CNBC
These experts aren’t dismissing crypto either – in fact, many have voiced support for the virtual currency. For example, Tim Enneking, managing director of Digital Capital Management, says: “You’re a fool if you don’t invest in crypto assets… But you’re also a fool if you invest too much.” He adds: “Everyone should have 1-2% of their portfolio in crypto assets,” said Enneking, “enthusiasts can have up to 5-10%.” It’s fairly reasonable advice for beginners.
Regardless, these allocations fall wholly short of what Edstrom considers ‘real adoption’. Subsequently, they back the validity of his statement that only 2% of the population have ‘truly adopted’ Bitcoin.
Bitcoin adopted by 50% of the world
Edstrom believes that if Bitcoin reaches its potential, then adoption under his listed connotations could exceed 50% – a huge leap from its current estimated 2%. It sounds outlandish, given that crypto adoption, in general, hasn’t even reached that point. This belief is cemented in the fact that adoption can grow over time. Let’s say a college student invests a little into Bitcoin. They then learn about it, and then over time, they may begin investing more and more of their savings – hence adoption. Versus something like purchasing a car, which is basically black and white in comparison: you either have a car or you don’t.
As such, to Edstrom, Bitcoin adoption is more akin to a spectrum, or a sliding scale if you will, between dabbling and committing a significant portion of one’s net worth. In this respect, his stance isn’t so different from other financial experts: “Invest a small amount at the start, learn a bit more, and then invest a little more accordingly” – just with a much higher allocation cap.
Edstrom ends his analysis off with some food for thought:
“For some financial advisors, bitcoin is already graduating past being the next Amazon (AMZN). It’s now on its way to becoming something more like the next gold or even the next S&P 500 – and possibly the largest asset class in a client’s portfolio.”
“As the percentage of the American and global population that has truly adopted bitcoin grows, I expect financial advisors who are on the right side of this trend to reap rich rewards. It isn’t necessary to build a practice around bitcoin – yet – but financial advisors would be wise to find ways to ride the bitcoin adoption wave. It’s just getting started.”
