Bitcoin's Recent Surge Creates New Billionaires

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(Forbes) - In the investing world, money talks. On rare occasions, however, vindication is even better than a giant mountain of cash.

Over the past decade, the true believers of the cryptocurrency revolution have turned what was once considered an oddball peanut gallery in the financial world into the next trillion-dollar asset class. And as they count their digital coins, they're ready to take a bow.

Over the past year, the gravity-defying stock market has given most investors a reason to grin, but none are smiling wider than bitcoin holders. While the S&P 500 has jumped 17% from the start of January 2020 through January 11, 2021, Bitcoin has spiked 400% in that same time, breaching $40,000 a coin and sweeping other digital assets into its rising tide.

All cryptocurrencies are now collectively worth more than $920 billion, according to cryptocurrency research site Messari, down from roughly $1 trillion on Friday.

One key factor driving the frenzy: As Covid led the Federal Reserve to print trillions of dollars to stimulate the economy and head off a recession, investors increasingly saw bitcoin as a hedge against inflation. Unlike the 2017 price rally from $1,000 to $19,000, which was driven by retail investors, the recent uptick has been propelled by large institutional investments and a proliferation of ways to buy and store crypto. 

In 2020, payments giant Square used $50 million of its corporate treasury to buy Bitcoin—an investment now valued at $161 million. Hedge fund billionaire Paul Tudor Jones said as much as 2% of his assets were in crypto, and private equity giant Northern Trust revealed plans to make it easier for its clients to store Bitcoin, Ethereum, XRP, Litecoin, and Bitcoin Cash.

PayPal lets its 300 million customers buy bitcoin and spend it at any of the 26 million merchants it supports. Along the way, some crypto investors have gotten very rich. At least five have recently crossed into the billionaire ranks, possibly quite a few more. 

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