Bitcoin is Set to Become A Gold Replacement: Scaramucci

Amidst the upheaval of Bitcoin, a new news has come in the market. Investors will need to accept the trajectory and level of volatility in bitcoin as the digital currency becomes more widely adopted globally, SkyBridge Capital’s Anthony Scaramucci has said.

Bitcoin is Gold Replacement

Following a run to an all-time high above $63,000 in April, the price of this cryptocurrency has swiftly tumbled in a matter of weeks — at one point even more than halving from those earlier highs. Still, it’s gained more than 10% since the start of 2021. As of 2:35 a.m. ET Wednesday, the price of BTC was at $33,744, according to data from Coin Metrics.

“I will point out that bitcoin is still up on the year, so it’s actually been a very good performer this year.,” Scaramucci told CNBC’s “Capital Connection” on Tuesday. Skybridge Capital has “about $500 million” in bitcoin, according to Scaramucci, founder and co-managing partner at the firm as well as a CNBC contributor.

He said digital currency is still only in its early adoption stage and is set to become a “replacement” for gold, adding: “We actually like the upside characteristics and are willing to accept the volatility in bitcoin.” The largest cryptocurrency by market capitalization, according to CoinMarketCap, BTC is often pitched as a potential rival to gold as a long-term store of value. At present, however, BTC’s price tends to be exponentially more volatile than that of gold.

“If you went back to Amazon’s IPO back in 1997, if you held that stock, $10,000 of that stock on its IPO is now worth $24 million. But you would have subjected yourself to eight periods of time where the stock dropped at least 50% as it was scaling, pursuant to Metcalfe’s law,” he said.

Metcalfe’s law states that the value of a network is proportional to the square of its users. Skybridge’s research department expects bitcoin users to reach a billion by 2025, from the 125 million at present, Scaramucci said. “Think of the phone system back in the early 1900s as people started to buy those phones and connect to each other,” he said. “That’s sort of what’s happening to bitcoin right now.”

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