Joel Macdonald says the U.S. economic situation is perhaps more precarious than ever. Asset prices, interest rates, and inflation are rocketing. Meanwhile, average consumer borrowing is at a record high, and the dollar has been devalued almost 20 percent since the beginning of 2020.
Elsewhere, there's an economic time bomb looming in public pension funding. The U.S. government has promised over $6.5 trillion in future retirement benefits. However, there's barely $5 trillion set aside. This almost $1.5 trillion shortfall—known collectively as unfunded liabilities—is climbing, too.
Right now, millions of Americans are excitedly waiting to retire. Unfortunately, as things stand, the government doesn't have the funds to allow many of its citizens to do so. Thankfully, though, it's not all bad news. That's because the first public pension funds to buy Bitcoin are now up tenfold on their initial outlay.
According to expert Joel Macdonald, it's a perfect lesson on why every fund manager should own at least a small proportion of Bitcoin. Based on the success of the first public pension funds to buy Bitcoin, fund managers need only place as little as one percent of their assets into the market-leading digital currency to see a material impact.
So, why should every fund manager—and arguably every pension fund—own at least a small percentage of Bitcoin? For starters, the currency is what's known as a non-correlated asset.
Non-correlated assets enjoy a low or negative correlation to traditional asset classes. They move independently of these classes, lowering portfolio volatility and improving risk-adjusted returns based on modern portfolio theory. That's why they're the crowning glory of many a successful portfolio today.
As of March 2024, Bitcoin's six-month correlation to the S&P 500 is zero. Its correlation to the dollar index is close to zero, too. Moreover, Bitcoin has what's known as an asymmetric return profile, Joel Macdonald explains. Asymmetric return profiles exist when there's a far more significant upside versus downside tied to owning a particular asset—in this case, Bitcoin.
With Bitcoin, the downside is the loss of capital. This loss's cap is the total amount of capital invested. However, the upside, should Bitcoin become, for example, gold equivalent, is potential gains of one hundred times or more. Bitcoin's market structure and the imbalance between supply and demand also indicate fantastic future performance.
Bitcoin currently represents the highest-performing asset of the past decade and a half. It's also now available to pension funds and fund managers in the shape of recently approved ETFs, further driving the market-leading digital currency into the mainstream. "Bitcoin is a one-of-a-kind asset class in terms of performance and risk reward. We have never had an asset class like crypto before," Joel Macdonald said.
The first public pension funds to get on board with Bitcoin pre-pandemic are already up ten times or more on their original investments. Based on the government's current $1.5 trillion pension shortfall, millions of Americans could use a Bitcoin injection in their future pension funds. This injection could ensure they receive what the government has long promised them.
It's also precisely the same reason that every fund manager should own a percentage of today's highest-performing, non-correlated asset. That's lest they also miss out on what could be theirs with some savvy financial decision-making.
