The CEO of Grayscale Investments, Barry Silbert, is smiling broadly these days over the future prospects of his firm. Recent research by Grayscale, the world’s largest digital currency asset manager with more than $2.6 billion across 10 products under its management, demonstrates that a significant portion of some $68 trillion of wealth in the U.S. could be passed down to future generations that are more inclined to invest in innovative products like Bitcoin, rather than Gold, which older generations trusted.
Silbert and his firm recently began an ad campaign, which ignited an ongoing debate comparing Gold and Bitcoin. As we reported in early June:
Grayscale Investments is a trusted authority on digital currency investing and runs a private placement fund called the Bitcoin Trust, publicly traded under the “GBTC” call sign. The firm’s current advertising campaign actually says that investors should “Drop Gold” and substitute Bitcoin. Obviously, Gold sellers take issue with this premise and have taken to the streets vociferously decrying such a notion.
Data presented in the above graphic would seem to support Silbert’s claim that a subset of $68 trillion that is currently invested in Gold could shift due to the inclinations of a younger set of generational demographics. The major portion of “Baby Boomer” wealth is set to be passed down to Millennials, who, based on informal studies, believe that Gold is old fashioned: “It’s the banks, it’s old people. Bitcoin is young and innovative: it’s a disruptor. It’s an investment in vision and entrepreneurship”.
Gold is an $8 trillion asset class today, and Bitcoin is about $230 billion. So if you do believe that there is a chance that over the next decade or two that Bitcoin will capture some of that $8 trillion, you know you’re talking about a pretty amazing upside case in Bitcoin. And that’s only the investment thesis around Bitcoin as digital gold. It’s not putting value on Bitcoin for all the other things that it could be.
Silbert explained his thesis further:
I think there’s a really interesting generational shift that’s happening that I think many investors don’t appreciate or are not focusing on, and that is that over the next couple of decades, the next 25 years, there’s $68 trillion of wealth that’s held by baby boomers and the older generation – and that’s just in the U.S. alone – that’s going to be handed down to Generation X and millennials… And so, my theory is that whatever [percentage] of that $68 trillion is currently in gold, I don’t think is going to stay all in gold. It doesn’t mean it’s going to go all into Bitcoin, but I do believe it’s going to find its way into other asset classes.
As a firm that is well acquainted with investor inclinations, specifically when it comes to the awareness and consideration of the digital asset class, Grayscale has found that potential investors in Bitcoin and other crypto offerings tend to go through five phases:
- Initially Dismissive: No interest whatsoever;
- Healthy Skepticism: No interest now, but let me think about it;
- Intellectually Curious: Please send me materials, and I’ll do my own research;
- Digital Believers: I like this space and its risk/reward demographics, and
- Crypto Evangelists: Cryptos are too important to ignore -I will spread the word.
Is a shift occurring in the present tense? Grayscale certainly has the numbers to support its case. Capital inflows last quarter were up 100%, and while it would not be possible to credit these inflows to a “generational shift”, a full 84% of the funds came from institutional hedge funds, which incidentally manage a large portion of the $68 trillion, in question.