A bitcoin survey by DataTrek Research yielded some quite revealing and interesting results.
The survey was conducted the week of November 13 with a total of 317 responses. Respondents included:
- Money managers (60%) or RIAs/Wealth Advisors
- 51% are over 45 years old, and 79% are over 35 years old
- Less than 5% work in the crypto-currency industry
I’ll provide their data results with their comments, followed by our thoughts. And since a picture is worth a thousand words, where feasible a pie graph has been provided:
Where will bitcoin close the year (2017)?
- Average response: $7,381
- Median response: $7,800
- Standard Deviation of Responses: $2,555
Our comments: As expected, we had a wide range of responses here. Overall, the wisdom of this particular crowd says bitcoin may be range-bound through the end of the year. Still, with a standard deviation of $2,500, it could top $10,000 or drop close to $5,000 and still be within one sigma of the distribution.
With bitcoin currently at $8,200, they’ve fallen a bit short. Many who know the market, such as billionaire hedge fund investor Mike Novogratz, who’s already made many millions of dollars investing in crypto-assets, states a target price in the short-term as being closer to $10,000. And when institutional investors dive into the fray it’ll go much, much higher.
Where is bitcoin going?
Our comments: we were surprised the bubble response was less than 40% given widespread commentary in that direction and the age/experience of the respondents. By age, at least, our survey takers has seen their fair share of bubbles. We were ready to see +70% responses indicate bitcoin’s price is unsustainable. Less than 40% is, well, remarkable.
See the previous comment. It’s also obvious many of the respondents hadn’t read Are we in a crypto-bubble? I sense bias in the comment by the way, like the author(s) felt it was a bubble and were shocked the responses were so low. I feel it’s too high given what I know about what a true bubble looks like.
Have you ever bought bitcoin or other crypto currencies?
Our comments: there are still plenty of fence sitters here, with those who have considered purchasing (36%) outnumbering those that have bought (31%). The big question is if they are waiting for a pullback, or further gains?
Absolutely, with a mere 31% currently in the market, there’s a lot of potential for growth. Again, see the first comment and if you haven’t, read the Novogratz article highlighting the major upside coming when institutional investors begin moving in. As an example, the Chicago Mercantile Exchange announced they will be offering bitcoin futures contracts by the beginning of 2018.
Would you ever see bitcoin as a safe haven similar to gold?
Our comments: this may be the most surprising finding of the survey. Even with widely reported wallet hacks and other systematic challenges, 41% of respondents think bitcoin can become something akin to gold as an investment safe haven.
I’ve mentioned many times that bitcoin is a tremendous store of value. It wasn’t till I read a post by Mr Luongo entitled The Foundation of the Next Cryptocurrency Bull Market that a lightbulb went off in my head regarding the recent aborted fork and what the implications were.
With the bitcoin community not reaching consensus, opting instead to keep the system slower with higher transaction processing costs, they have determined that bitcoin is, in fact, a reserve asset. I appreciate the opinion Mr Luongo shared:
This is not to say that I’m not a fan of Segwit. I am. But, am I a fan of Segwit on Bitcoin? I don’t know. In the world of cryptocurrencies I want a reserve asset that sits at the bottom of Exter’s Monetary Pyramid that can be 1) incorruptible and 2) a standard against which all other monetary-like assets, including utility tokens like Ethereum, can be measured.
Read his full article for more insights.
Do you see bitcoin as a hedge against monetary policy?
Our comments: almost as surprising as the gold question, these responses show a sizeable minority believe bitcoin’s algorithm-driven limited supply can act as a non-correlated buffer against central bank policy.
If you haven’t heard about the recent non-coup military coup in Zimbabwe, you might want to catch up. The country’s economy had ground to a standstill with over 95% unemployment and with no national currency and no operational bank in the country.
Per MarketArmor, for all of 2016 the Zimbabwean bitcoin exchange processed around $100,000 in transactions. As political and economic chaos worsened, more and more turned to bitcoin to help them survive, pushing the local market price of a single bitcoin above $13,000 with already over $1 million in processed transactions for 2017. Ask any of these Zimbabweans if they see bitcoin as a hedge against “official” monetary policy.
Have you ever participated in an Initial Coin Offering or looked at such opportunities?
Our comments: over a third of respondents have looked at or invested in ICOs. Not bad for a fund raising approach that is just a few years old. And over half might consider ICOs if/when the regulatory framework improves.
The Libertarian in me screams no, we don’t need no government regulation. We do need rules, but it would be best if these were from the community. With a mere 8% having already invested, wouldn’t it be better to say that there’s tremendous upside potential with 92% having not yet invested? I like that.
If you look at ICOs, how do you assess these opportunities?
- The three most popular answers, in order: Founders/Key Employees, Total Addressable Market, and Sector Addressed
- Less popular: Token type, Deal Pricing and Time to Market
Our comments: no surprise here, with ICO investors looking at exactly the same issues as venture capitalists.
We’re entering a brand-new paradigm with blockchain. It’s time to invent a different way of investing and to look at investing in a different way.
What is your level of confidence in current bitcoin custodial offerings?
Our comments: this is a critical issue for institutional investors. In order for crypto currencies to achieve true “Asset class” status, investor confidence in custodial solutions has to improve.
I’m not in finance. I can understand the confusion, however. I was initially introduced to bitcoin several years ago, but at the time it was just too nebulous a concept. Like many reading this I’m sure, initially you sorta had to stretch to wrap your brain around it. But, once you DO get it, well!
What is your level of confidence in crypto asset liquidity?
Our comments: same thoughts here as the previous point. While respondents may feel marginally better about crypto liquidity, over half rate their confidence here as low or they just don’t know enough to judge.
Liquidity really isn’t an issue if you’re knowledgeable about what you’re doing. Compared to a mere 5 years ago we’re vastly improved. With greater market participation and adoption, this will continue its upward trend in fluidity.
Our final thoughts on the data presented:
- Institutional investors are taking bitcoin/cryptos seriously. If you’ve ever run an in-depth survey, you know getting 300 responses is difficult. The fact that we got even more shows there is tremendous interest in bitcoin and crypto currencies.
- Initial Coin Offerings are getting real attention as well. Investors already understand the due diligence process here – it is the same as venture-stage investing. Custody and liquidity across the crypto space do need to improve, however.
- A sizable minority of respondents (39 – 40%) see bitcoin as a potential analog to physical gold, both as a safe haven and a hedge against mistakes in central bank monetary policy. Until blockchain technology becomes more widespread, that is probably the best way to consider buyers’ motivation for bitcoin.
All-in-all, the results of the survey are promising, considering this was a non-community response. There are some gems. The sense of survey bias is unhelpful and disheartening, but perhaps to be expected. Several of the question results point to tremendous market potential, suggesting we’ve barely scratched the surface.
Respond with anything else you may see or feel in the comments.