A follow-up to my 2021 article, reflecting on Bitcoin's remarkable transformation from speculative asset to institutional treasury reserve

Note: This article represents the personal views of Archie Hamilton and does not constitute investment advice. Cryptocurrency investments carry significant risk and may not be suitable for all investors. Please seek professional financial advice before making any investment decisions. The author has significant personal holdings in cryptocurrency assets.

Introduction: The Greatest Investment Opportunities of Our Time

How many people wish they'd bought Microsoft shares in 1986 (~400,000% return) or Apple in 1999 (~21,000% return)? Bitcoin purchased in 2011 would have rivalled these legendary returns, delivering approximately 323,000% gains to early adopters.

This raises the inevitable question: what will be the equivalent names to hold in 2035 or 2045? What should astute investors be positioning in today to maximise the probability of these life-changing returns for retirement or to provide financial security for the next generation?

While nobody can predict the future with certainty, there are spaces that appear higher probability than others. If it were our money (and we should emphasise that the author has put significant capital where his convictions lie), we would be preparing to bet heavily on cryptocurrency, specifically Bitcoin, as a likely asset class to hold for the next 20 years. Although we don’t advocate timing the market, given the volatility and cyclical nature of this space, we would not be deploying our entire allocation right now due to how far along in the potential 4-year cycle we currently are. We would be waiting for the market to shake out before making significant moves, although we would recommend some dollar cost averaging to make sure we don’t miss out completely.

Is there life beyond Bitcoin? While Bitcoin has emerged as a significant store of value akin to gold, we are also bullish on some of the other blue-chip projects in the crypto ecosystem. We strongly believe that Ethereum, Solana, and Chainlink represent potential Microsoft equivalents of the next 10-20 years—well used and battle-hardened cryptocurrency names that could deliver transformational returns as blockchain infrastructure matures and becomes ubiquitous.

The Institutional Revolution: From Scepticism to Embrace

Since our last article in 2021, the cryptocurrency market has been nothing short of a roller coaster. The overall market capitalisation fell from record highs of over $4 trillion in November 2021 to lows of $796 billion when the FTX exchange imploded and CEO Sam Bankman-Fried was arrested for fraud.

However, what followed has been perhaps the most significant validation of Bitcoin in its 16-year history. Bitcoin more than doubled in 2024 driven by the U.S. markets regulator's approval for exchange-traded funds tied to its spot price, with the cryptocurrency recently reaching an all-time high of $109,000 per Bitcoin.

Most notably, the very institutions that had "roundly panned" the cryptocurrency market for years—Jamie Dimon of JPMorgan, BlackRock leadership, and Goldman Sachs—have executed a complete reversal. In January 2024, the SEC finally approved the first physical bitcoin ETFs, with the first 10 funds launching on January 11, 2024, providing investors with a regulated, legitimate pathway to cryptocurrency exposure.

The price of bitcoin was $24,900 when BlackRock filed its ETF application, then $46,000 when it was approved, and today we are trading significantly over $100,000—a testament to the power of institutional adoption.


Understanding the Four-Year Cycle

Bitcoin, launched in 2009 by the mysterious Satoshi Nakamoto (now theoretically the 10th richest person globally with approximately $120 billion in the original Bitcoin wallet), has tracked a fairly predictable four-year cycle for three complete cycles. This pattern is driven by Bitcoin's programmed "halving" events, where the reward for mining new Bitcoin is cut in half every four years, reducing supply inflation.

Many analysts believe this cycle will continue indefinitely, and we've seen strong evidence of a fourth cycle commencing. However, some detractors argue that Bitcoin's maturation and institutional adoption may be breaking this historical pattern.

Notably, we haven't so far entered the mania phase that signified the end of the previous three cycles—it will be interesting to see if there will be a blow-off top this time around, or just continued accumulation. We should definitely be focused on preparing ourselves for proper allocation once this becomes clear.

 

The Meme Coin Phenomenon vs. Utility Assets

An interesting development has been the absence of the traditional "alt-coin season"—many alternative cryptocurrencies remain well below their all-time highs. Instead, we've witnessed an explosion in meme coins throughout late 2024 and early 2025.

Meme coins are cryptocurrencies with no underlying utility or technology, existing purely as speculative vehicles often based on internet jokes or cultural references. This contrasts sharply with utility coins, which power specific blockchain applications, smart contracts, or decentralised services.

The meme coin craze reached its apex when the President launched his own tokens, $TRUMP and $MELANIA, shortly before taking office. By some estimates, this extracted wealth from approximately 800,000 retail investors—highlighting the risks inherent in speculative, non-utility digital assets and highlighting the US President's love of a good grift.

The liquidity that flowed in and out of this part of the industry was incredible to watch and staggering in speed and volatility. Check out the charts of the most egregious of these: $MOODENG, $FARTCOIN, $POPCAT.  The memecoin space resembles the worst kind of casino with “degens” (the colloquial term for individuals that engage in high risk and speculative trading – often early participants in the industry) winning and losing huge amounts in spectacular fashion. For an example of peak degen, check out the story of James Wynn, a man who turned $7k into $82m on one of the early meme coins, but lost $100m recently by taking a public and incredibly risky leveraged long on the new DEX Hyperliquid.

Technology has made launching a new coin a matter of a few minutes with very little effort, and as such, the number of projects in the cryptocurrency space has ballooned from just a few thousand in 2017-18 to an estimated 37 million in June 2025.  The sheer volume of new projects on the market and the prevalence of no-utility meme coins has once again undermined the legitimacy of the space as a whole. 

The Great Wealth Transfer: A Generational Shift Toward Digital Assets

Perhaps the most compelling macro trend supporting Bitcoin's long-term prospects is the unprecedented intergenerational wealth transfer currently underway. Over the next two decades, an estimated $84.4 trillion in assets will be passed down from the Silent Generation and baby boomers to their heirs, primarily Millennials and Gen Z.

This isn't merely about the scale of wealth changing hands—it's about the fundamental difference in investment preferences between generations. About half of Millennials and Gen Z respondents globally said they either currently own crypto or have in the past, at 52% and 48%, respectively. Younger generations are allocating 14% of their portfolios to crypto, compared to traditional boomers who remain heavily weighted toward bonds and dividend-paying stocks.

Matthew Sigil, head of digital assets research at Van Eck, has estimated that of this $84 trillion wealth transfer, $6 trillion could flow into crypto assets as younger inheritors reallocate their newfound wealth according to their investment preferences. This represents a potential sixfold increase in total cryptocurrency market capitalisation based purely on demographic trends.

The timing couldn't be more significant. As Hamilton clients plan their estate strategies, they should consider not just how to preserve wealth, but how the next generation is likely to deploy inherited assets. The traditional 60/40 portfolio may give way to allocations that include significant cryptocurrency positions simply through generational preference shifts.

The Macro Environment: Why Bitcoin Makes Sense Now

The Inflation Reality

Consider this sobering statistic: $100 in 2020 purchasing power is worth approximately $74 today due to inflation. Traditional stores of value are failing to protect wealth against currency debasement.

Government Debt Crisis

The bond market faces unprecedented challenges. The Federal Reserve was forced to purchase $10 billion of its own debt recently due to lack of buyer demand—the highest yields since the Global Financial Crisis. The US government paid $1.05 trillion servicing its debt in 2024 and is predicted to have to pay an additional $13 trillion by 2034. It is essentially bankrupt by any rational measure. To put this in perspective, debt servicing now represents approximately 15% of total federal spending, making it the third-largest budget item after Social Security and Medicare.

Banking Sector Vulnerabilities and the Flight to Bitcoin

The traditional banking system faces its biggest disruption in decades from blockchain technology. While we're not in as precarious a position as two years ago with Silicon Valley Bank's collapse, unrealised losses continue accumulating across the sector. Any capital shock—such as another natural disaster affecting the Japanese insurance market—could trigger broader instability.

It is this fundamental concern about the stability of traditional financial institutions, combined with worries about government debt sustainability, that is driving the flight to Bitcoin as an alternative store of value.

Corporate Treasury Adoption

This institutional fear has manifested in unprecedented corporate Bitcoin adoption. MicroStrategy, now rebranded as "Strategy," has become the world's foremost Bitcoin treasury firm, holding approximately 582,000 Bitcoin (over 2.5% of the total supply) with an average cost basis of around $66,385 per Bitcoin. The company has pioneered the concept of using Bitcoin as a treasury reserve asset, raising over $14 billion in new capital this year to fund Bitcoin purchases.

Strategy's approach has been to create what they term "Bitcoin Yield"—using their stock's premium to net asset value (NAV) to acquire more Bitcoin. Currently trading at approximately 1.6x the value of its Bitcoin holdings, Strategy leverages this premium through convertible bonds and equity raises to continuously expand their Bitcoin reserves. This creates a self-reinforcing cycle where the premium allows for more Bitcoin purchases, which in turn maintains the premium.

This isn't isolated behaviour. Corporate Bitcoin holdings have approximately doubled over the past year, with over 100 firms now holding more than 819,000 Bitcoin collectively. These companies view Bitcoin as a superior store of value compared to holding depreciating cash reserves or potentially unstable government bonds and a supply crunch is happening. Strategy has purchased more than 3 years of supply this year alone, with other corporate treasuries adding to the supply side pressure. It’s worth remembering that BTC is a non-inflationary asset – there will never be more than 21m coins available – which drives a more compelling reason for everyone to have some.

Why the Wealthy Are Choosing Bitcoin

The affluent require stores of value more than those with limited assets to protect. Bitcoin has emerged as a divisible, transportable, global, increasingly regulated digital vault. Unlike physical assets or traditional investments, Bitcoin can be transferred instantly across borders, stored securely without counterparty risk, and accessed 24/7.

Wealthy individuals and institutions have recognised Bitcoin as potentially the safest long-term store of value in an era of currency debasement, geopolitical uncertainty, and technological disruption.

Looking Forward: Alt-Coins vs. Bitcoin Dominance

A key question for 2025 and beyond is whether we'll see capital flow into alternative cryptocurrencies or continued Bitcoin dominance. Several factors suggest Bitcoin will maintain its leading position:

  1. Regulatory clarity: Bitcoin has the clearest regulatory framework
  2. Institutional adoption: Major corporations and investment firms favour Bitcoin over alternatives
  3. Network effects: Bitcoin's brand recognition and adoption create powerful network effects
  4. Store of value narrative: Bitcoin has established itself as "digital gold"

However, retail investors who missed Bitcoin's earlier gains may seek higher-risk, higher-reward opportunities in alternative cryptocurrencies. Additionally, much of the technology sector's attention has shifted toward artificial intelligence, potentially reducing innovation and investment in blockchain applications.

Portfolio Considerations for Hamilton Clients

The traditional "boomer portfolio" of 60% stocks and 40% bonds may be giving way to allocations that include cryptocurrency. Blackrock now recommend all their clients hold at least 2% of their wealth in crypto.  BBVA (Spain’s second biggest bank) just went further, saying that a 3-7% allocation was sensible.

For suitable investors, a small allocation to Bitcoin and related alt-coins (typically 1-5% of total portfolio value) can provide:

  • Diversification: Low correlation with traditional assets
  • Inflation protection: Hedge against currency debasement
  • Growth potential: Exposure to a potentially transformative technology
  • Liquidity: 24/7 market access and high liquidity

The key is appropriate position sizing. Crypto remains volatile and speculative, making it unsuitable as a core holding. However, for investors who can tolerate the volatility, it offers compelling risk-adjusted return potential, and there are plenty of regulated ways to get your hands on some.  Please talk to us if you’d like to consider it.

Conclusion: The Opportunity Ahead

We stand at an inflection point. Bitcoin has evolved from a speculative experiment to an institutional asset class with regulatory approval, corporate treasury adoption, and growing acceptance among traditional finance.

However, we believe this is not the time to deploy significantly into cryptocurrency. Given where we are in the potential 4-year cycle and the current elevated prices, we would advise being prepared to invest properly when and if this cycle mean reverts. The key is positioning and preparation rather than immediate deployment.

The question isn't whether cryptocurrency will play a role in the future of finance—that's already been decided. The question is whether investors will position themselves appropriately for this transition while maintaining proper timing discipline.

As with any emerging asset class, timing matters enormously. Those who recognise generational shifts in financial markets and have the patience to wait for optimal entry points typically reap the greatest rewards. For Hamilton clients considering cryptocurrency exposure, the institutional infrastructure now exists to participate in this market through regulated, professional channels when the timing is more favourable.

The next decade will likely determine whether Bitcoin fulfils its potential as a global reserve asset or remains a niche store of value. Given the macro-economic environment, institutional adoption trends, and regulatory developments, the probability appears to favour the former. The prudent approach is preparation and patience rather than immediate significant deployment.

This article was written in June 2025 as a follow-up to "My Case for Crypto" published in November 2021. The cryptocurrency market remains highly volatile and speculative. Past performance does not guarantee future results.


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