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Bitcoin: Where Capital Is Likely to Flow in the Crypto World

By Chris MacDonald – Nov 12, 2021 at 7:30AM

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How this King of Cryptocurrency could continue to reign for some time.

Most crypto investors know Bitcoin (BTC -0.81%) is the leader in the cryptocurrency space, and will likely be for some time. However, there's a growing consensus that the rise of Bitcoin ETFs and institutional money flows could further this argument moving forward. contributor Chris MacDonald discusses this very topic with The Motley Fool's Eric Bleeker on this episode of "The Crypto Show" from Backstage Pass, recorded on Oct. 20.

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Eric Bleeker: Chris, let's take it away. Let's start with Bitcoin. It should need no introduction for most people watching, but what is it about Bitcoin that makes it one of the five most interesting cryptos to you?

Chris MacDonald: Well, Bitcoin as of today hit a new all-time high. It's definitely the biggest, the first from a historical value perspective, a lot of investors view it as the most stable, the largest network. I think going back to the discussion around crypto in the parallels between crypto and business for investors, whether it's retail investors or institutional investors looking for positive risk-adjusted returns, Bitcoin provides a little bit more stability.

It's still highly volatile, just like the entire crypto sector, but investors know what they're getting with Bitcoin. It's often referred to as digital gold and as a hedge on the market.

Whether or not that's true, I think will be proved over time. But I think capital flows into the crypto sector are really important to watch. With the rise of Bitcoin ETFs, like we just spoke about at the top of the show, and with asset managers looking to allocate money into assets with good risk-adjusted returns, Bitcoin will be a number one choice for a lot of big money to pursue.

I don't know if I'm right on this, but I think Bitcoin has roughly half the market cap of the entire crypto world. I don't think there's any reason for that to change anytime soon. Demand is likely to be robust and performance leads to adoption. You look at the long-term returns Bitcoin has provided, and it's hard to argue with that. There's a pretty easy argument institutional investors and retail investors can make with owning this for the long term. In terms of how I would build my portfolio when thinking about the top five, Bitcoin has to be a core anchor in there.

Eric Bleeker owns shares of Bitcoin. The Motley Fool owns shares of and recommends Bitcoin. The Motley Fool has a disclosure policy.

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