BlackRock CEO: Bitcoin to Hit $700,000

First slowly, then all at once.

That’s how it has felt over the last few months in bitcoin relative to the last few years.

And to be clear, I’m not going to end today’s dispatch with, “And that’s why you should buy bitcoin.” Today, I’m playing the role of Joe Friday, the Dragnet TV show cop, and I’ll “just provide the facts, ma’am.”

Our facts begin and end in Davos, Switzerland, where the world’s money bags have gathered to count their money and drink fine wine, or whatever they do there in the Swiss mountains.

On Wednesday, we had BlackRock CEO Larry Fink make news with a bitcoin price prediction. And before I tell you his prediction, I just want you to know that Fink is the poster child of the Six Degrees of Kevin Bacon game—where every actor in the world is supposedly just six steps removed from Kevin Bacon. Well, Larry Fink is about one degree removed from anyone of significance in the world.

Meaning Larry Fink, head of the largest asset management firm in the world ($10 trillion under management), knows everyone and can reach out to everyone at any time of day.

So, what Larry Fink has to say is rooted in what and who Larry Fink knows. And when you are One Degree From Everybody, well, you know a lot.

Fink’s bitcoin price prediction: As much as $700,000.

How does he get to such a high number?

Wel, El Jefe has that answer for you. It goes back to what El Jefe has been writing to you about since at least November: The Bitcoin Arms Race.

Larry “One Degree From Everybody” Fink has been having conversations with sovereign wealth funds around the world in recent weeks and those funds, per Fink, are actively exploring the allocation of between 2% and 5% of their assets into bitcoin.

I mean, think of how much money that is.

We can to the math…

• The world’s sovereign wealth funds control about $13 trillion in cumulative assets.
• 2% of that is $220 billion; 5% is $550 billion.
• 21 million bitcoin is all that will ever exist.
• At roughly $105,000 per bitcoin right now, the cumulative value of 21 million bitcoin is $2.2 trillion.
• So, 2% in bitcoin is about 10% of the cumulative value of bitcoin; 5% is right at 25% of bitcoin’s cumulative value.

Now I have no idea how much of that $13 trillion is in play. There are some countries that are clearly not going to participate in the bitcoin arms race.

Then again, there’s a lot of bitcoin that’s not in play either, either permanently lost (between 1.6 million and 4 million, according to various estimates) or held by investors who aren’t selling. I’d say all that balances out so that sovereign wealth consumption means that demand for bitcoin rises by between 10% and 25%.

Moving on…

At the same Davos group grope, Bank of America CEO Brian Moynihan, started riffing on the idea that the Trump admin might do away with rules that currently prevent banks from serving as custodian to bitcoin accounts, and which force banks to record bitcoin not as an asset but a liability. That latter rule is what has led to the banking industry blacklisting so many crypto-based businesses in America, driving technology developers and innovation offshore.

Moynihan: “If the rules come in and make it a real thing that you can actually do business with, you’ll find that the banking system will come in hard on the transactional side of it.”

By that he means we’re going to see banks roll out crypto-as-payment services… which ultimately would push consumerism onto the blockchain.

Consumers wouldn’t necessarily see any real difference in their transactional experience. But back-office operations would change, reducing costs, increasing transparency, and reducing transaction times to seconds or less from minutes and days.

In other words, a real financial boon to banks and their shareholders… and I don’t feel I need to remind you that the services that benefit bank shareholders are the service we the consumers get.

So that’s the word from Davos.

Very bullish on bitcoin.

And I’ll leave it at that.

You know what to do…