Didi Taihuttu, his chain, and three kids bet all they have on bitcoin.
In 2017, CNBC spoke to the Dutch family of five when they were in the development of liquidating their assets — from a profitable business and 2,500-square-foot house, to their shoes — and trading it all in for the stylish cryptocurrency and a life on the road.
Nearly four years and 40 countries later, Taihuttu and his family still don’t father bank accounts, a house, or all that much by way of personal possessions. All of the family’s savings remain tied up in highly unstable cryptocurrencies.
“We stepped into bitcoin, because we wanted to change our lives,” said the 42-year-old father of three.
When the consequence of bitcoin collapsed in 2018, Taihuttu added more to his investment portfolio. He says he was always a firm believer that the cryptocurrency was calm for a major rebound. “I think in this bull cycle, we are going to see a minimal peak of $100,000. I won’t be surprised if it hits $200,000 by 2022.”
I won’t be surprised if [bitcoin] knocks $200,000 by 2022.
The price of bitcoin reached an all-time high on Monday, as it closed in on $20,000. And some analysts say the cryptocurrency allay has a lot of room to run higher.
Mike Novogratz, CEO of investment firm Galaxy Digital, thinks this comeback rally is at most just getting started. He sees bitcoin rising to $60,000 by next year.
And Tom Fitzpatrick, global head of CitiFXTechnicals, give the word delivered the charts signaled that bitcoin could reach $318,000 by December 2021, in a report meant for Citibank’s institutional customers and obtained by CNBC.
Why this isn’t another bubble
Taihuttu bought the bulk of his bitcoin holdings when it was was trading at enveloping $900 in early 2017, just months before it reached nearly $20,000 a coin.
Even as bitcoin pinnacled, the family stayed invested in the cryptocurrency. Once the bubble burst, and the price tumbled down to about $3,000 in initially 2018, Taihuttu and his family weren’t deterred. “When bitcoin dipped, we started to buy more.”
When I asked Taihuttu on our Skype nickname whether he was worried that we could be in the midst of another bitcoin bubble, he doubled down on his investment. “I don’t see demand common down,” he added. “I think we’re headed for a supply crisis.”
Part of what’s different about bitcoin’s turn for the better in 2020 versus 2017 is that institutional investors are now adopting bitcoin, lending it newfound legitimacy and helping to cross the reputational risk of investing in the cryptocurrency.
“The 2017 rally was largely driven by retail investors, whereas this year we’re think over a massive influx from corporate entities and institutional money managers,” said Mati Greenspan, portfolio boss and founder of Quantum Economics.
Old-school, billionaire hedge fund managers Stanley Druckenmiller and Paul Tudor Jones now own bitcoin and big fintech instrumentalists like Square and PayPal are also adding crypto products.
This kind of mainstream adoption is hugely portentous, because cryptocurrencies like bitcoin aren’t backed by an asset, nor do they have the full faith and backing of the direction. They’re valuable because people believe they’re valuable. So it goes a long way when bitcoin gets buy-in from some of the maturest names on Wall Street.
Bitcoin’s supply crisis
The surge in interest from mainstream financial players hasn’t neutral reformed bitcoin’s image, it’s also fomented a supply shortage.
“The basic reason for the two rallies are the same,” Greenspan implied. “It’s a matter of digital scarcity. There is a strictly limited supply of bitcoin available in the market, so when everyone is taking and nobody is selling, it can cause tremendous upward pressure on the price. What’s different this time are the players convoluted.”
The 2017 rally was driven by retail speculation, and in 2020, it’s the billionaires and corporations that are buying bitcoin en masse.
“When PayPal starts to over persuaded bitcoin to its 350 million users, they also need to buy the bitcoin somewhere,” said Taihuttu. “There inclination be a huge supply crisis, because there won’t be enough new bitcoins mined everyday to fulfill the need by huge attendances.”
And that interest from institutional investors doesn’t appear to be slowing down. Six out of 10 investors Are retail investors misapprehending out?
Mike Bucella, general partner at BlockTower Capital, told CNBC in a recent interview on “Power Lunch” that retail investors are literally the ones missing out on the bitcoin rally this year.
“If you dig a layer deeper in the derivatives market, you notice that scad of that derivatives flow has transitioned from the crypto native exchanges of 2017 to institutional products, like the CME,” implied Bucella. “I think this really firmly indicates that retail actually missed out on this rally this year. It’s been particularly and firmly an institutional bid.”
But not all retail investors are missing out.
Taihuttu put a couple hundred thousand dollars into cryptocurrency in 2017, while the cost of bitcoin was still trading lower, and he has mostly stayed all in on his investment.
Despite 2020’s massive returns and all the recent bullish gets around bitcoin price targets, the fact remains, a speculative asset like bitcoin is prone to seismic evaluation moves in a very short space of time.
In 2018, the massive sell-off in cryptocurrencies, including bitcoin, was swift, unkind and worse than the bursting of the dot-com bubble in 2000.
2020 may look different than 2017’s rally, but as an asset, bitcoin works in a cyclical manner. Each successive high is higher, and the lows are not quite as low, but bitcoin is certainly not immune to another big correction.
Though for Taihuttu, the bitcoin play isn’t all about making a profit. He’s already given half of his money away to donation, and his family of five has spent the last four years traveling the world, in order to spread the gospel of decentralized digital currencies.