Willy Woo Warns: Bitcoin Needs Big Capital to Rival USD or Gold

Woo explained that Bitcoin needs more money flowing into it to compete with the US dollar or gold.

He told the audience, "The thing is, you don’t get to change the world unless this monetary asset gets big enough to rival the US dollar".

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However, he pointed to a few key reasons why Bitcoin may fall short of that goal.

One concern is how companies that hold Bitcoin on their balance sheets are managing their financial risk. Woo said many of these firms use borrowed money to buy Bitcoin, but there is little public information about how those debts are structured.

He also noted that some non-Bitcoin projects are copying this approach, which could lead to another market-wide bubble.

Another issue is how large investors are choosing to gain exposure to Bitcoin. Instead of holding it directly, many are buying shares in spot Bitcoin exchange-traded funds (ETFs) or trusting companies like Strategy and custodians like Coinbase $11.73M .

Woo said this could backfire if governments decide to step in and take control of these centralized holdings. By avoiding self-custody, investors are opening the door to the risk of having their assets seized or restricted by state actors.

He raised the possibility of these risks becoming more obvious during a market downturn. In that situation, it would become clear which firms were unprepared, and many Bitcoins could be forced back into the market.

Recently, Ray Dalio, founder of Bridgewater Associates, advised setting aside about 15% of one’s investment portfolio for either Bitcoin or gold. Why? Read the full story.