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Bitcoin prices just hit another all-time high at $1,722. Most of the reasons why I've been bullish on the digital currency or asset remain in place. Here are six of the most important:

1. Venture Capital is betting big

By now there is $1.5 billion in venture capital backing various cryptocurrency ventures. These are mostly startups working to make blockchain and cryptocurrencies more accessible and or more useful. Payment systems benefit from a network effect, gaining traction is very important. So far this year about $100 million of venture capital went into the space which is slightly behind the pace for 2016.

2. The Network Effect

As I said there is something of a network effect and Back in 2013 there were only 13.000 wallets on Coinbase. Today there are 6.8 million. Coinbase is backed by major names in the venture capital world:

3. Big business adding to the ecosystem

It's not just venture capital that's building out the ecosystem. A big name like IBM (IBM) is issuing a steady stream of blockchain related press releases like this one and this one. Overstock (OSTK) build the first blockchain stock exchange and issued a preferred share through it. Microsoft (MSFT) started accepting Bitcoin.

4. Hedge Funds buying in

The graphs below show Google search interest in Bitcoin, courtesy of Bitcoinist, and interest by city. The interest by city shows heightened interest from the hedge fund communities close to New York City. Which suggests the people living here are educating themselves on cryptocurrencies:

5. Asset management and family offices buying in

Asset management firms and family offices are increasingly acknowledging the potential of cryptocurrencies and so are hedge funds. In a previous article Ive already documented how U.S. asset management firm Horizon Kinetics started a Bitcoin fund for its clients (emphasis mine) and there was a lot of interest:

In 2016, Horizon Kinetics also established a fund that invests in bitcoin. Bitcoin is an example of a cryptocurrency. This asset class will be discussed more fully in the section pertaining to our investment in Digital Currency Group. This asset class did not exist several years ago; it is entirely new. The fund established an investment maximum of $50,000 per client. We are not aware of any other firm that so constrains client contributions. However, we believe it is the easiest and most obvious way to control risk. We simply limit the amount of money that can possibly be lost to an amount that is tolerable. Investment firms often complain about the short-term focus of clients. The short-term focus is more understandable if the investment in failure mode could quite negatively impact their lives. In any case, we rapidly sold essentially every available slot in the fund.

Later I heard from the company they have two funds that are open to accredited investors only.

Ark Invest holds bitcoin through the well known GBTC trust. Their whitepaper is a must read. They hold GBTC in its Next Generation Internet ETF (ARKW) and the ARK Innovation ETF (ARKK). Horizon Kinetics also invests in GBTC though its Kinetics Internet Fund No Load (WWWFX), Kinetics Paradigm Fund No Load (WWNPX) and Kinetics Market Opportunities (KMKAX). When fund buying becomes widespread this can really move Bitcoin in a big way, as I previously wrote:

1) On a global basis there's over $100 trillion in assets under management. Imagine only a 1/10th of 1% getting moved into bitcoin.

2) Institutions holding for diversification or long-term investment purposes may have much steadier hands than the current bitcoin traders, which could help stabilize bitcoin's volatility, which would in turn make it more attractive to other investors and retailers.

6. Bitcoin runway

With Bitcoin now hitting record highs and no clear way to value it many people will be thinking: I guess I missed the boat. One way I think about it is as follows; can Bitcoin, or another cryptocurrency, reach the market cap of Visa? Perhaps displace Visa (V)? Could it become something like digital gold? Can it replace the Dollar as a reserve currency? If your answer is yes to any of these questions it can at least quadruple:

Source: Created by author.

Easy ways to get some Bitcoin:

I use the above-mentioned Coinbase, which is a cloud based cryptowallet. It is very user-friendly. No advanced tech knowledge is required. In addition, you can also hold Ethereum and other emerging cryptocurrencies, which is very interesting and convenient to me.

Disclosure: I am/we are long OSTK, FRMO.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I also have some exposure to Bitcoin and other cyrptocurrencies.

Continued here:
6 Reasons To Buy Bitcoin At Its $1722 Record High - Seeking Alpha