It’s time to talk about Bitcoin

Bitcoin fell 5.3% last Thursday, plummeting to $48,357.31.

Bitcoin bulls and bears will respond to that statement of fact with disparate views. (Disclosure: I’m a Bitcoin agnostic.) The bears might note that the current price and volatility stem from speculative froth across all financial markets. But the bulls would likely counter that the digital asset is grabbing more mainstream attention and the inherent value is coming to the fore, and that’s why the price has climbed so high. But they will talk about it. 

The battle of words reminded me of a recent conversation with a portfolio manager who discussed having to evaluate the Noise-to-AUM ratio of any potential investment. 

For years, that N/AUM ratio for Bitcoin has skewed, dare I say, loudly toward noise. The mystery of its creation, and the debate of its value overwhelmed any real value, or AUM applied toward it. And that let people avoid the conversation. 

That has changed. Between Tesla Inc.’s investment (putting Bitcoin above employees), Chamath Palihapitiya putting the power of his voice behind it, and the S-1 filing by Coinbase Global Inc., the ratio is shifting quickly toward even. 

And as that ratio turns even, it’s a conversation that advisers can no longer avoid. Advisers don’t have to join the bulls, but they better join the discussion.