Zagari explained that while the election of Donald Trump was a catalyst for bitcoin, there has been more than just political sentiment driving its price increase. Paul Atkins, a pro-crypto former SEC commissioner, has been nominated as US SEC chair, contributing further to the sense that US politics will not stand in the way of cryptocurrencies. He notes, too, that with the rise of US spot bitcoin ETFs, more retail and institutional money has been able to access bitcoin, driving up demand.
The chief reason for this price rise, according to Zagari, is the increasing awareness of bitcoin’s utility as a medium of exchange. As more people have started to use bitcoin to transact peer-to-peer, Zagari says that demand has increased. He describes bitcoin as a disruptive technology and likens its impact on commerce to what digital photography did to Kodak.
While a believer in bitcoin, Zagari is aware that it has a volatile price component. On the same day it rose to over $103,000 USD it fell back to around $99,000. As its price accelerates Zagari says investors should expect volatility to accelerate as well. As much as he believes in bitcoin, Zagari emphasizes investment best practices when managing this asset for clients. Dollar cost averaging, reasonable allocations, and risk-aligned positions should be watchwords for any advisors entering this space.
When communicating about bitcoin with his clients, Zagari has stressed his team’s knowledge and understanding of the asset. He has outlined the risks and his strategy clearly, and explained how he and his team incorporate bitcoin into their models. As other advisors field inquiries from their clients Zagari says they need to be completely honest about what they know and what they don’t know.