I had to get my son, Nicholas Thomas, to help me with this one… which should give you an idea of today’s topic.
Cryptocurrency, a concept I was skeptical of for years.
As a brick-and-mortar guy, it seemed too intangible to me. Too unconnected to reality. Its price fluctuations were intense and, to my mind, unpredictable. Its very existence shrouded in mystery.
But then my son – now in his 20s – became exceptionally interested in crypto. He’s even making a business venture out of it, writing about the subject on platforms like Seeking Alpha and Benzinga.
In the process, I have to admit, he has taught this old dog a few new tricks.
I can’t say I actually invest in cryptocurrency today any more than I did before. Nor do I fully understand it. So, I can’t recommend it either.
But all the signs are showing that, despite all the naysaying, it’s here to stay.
Bitcoin (BTC-USD), the one that started them all, has now survived over 15 years. That’s longer than most startups. Much longer, in fact.
They say that around 10% of new businesses fail in the first year of operation alone. And 70% crash and burn before their sixth.
Well before 15 years, around 90% of startups call it quits.
And, yes, I know Bitcoin is not an operating company in the sense of a traditional startup, but it was an experiment… one that was far from certain.
Earlier this month, Nicholas pointed out how Bitcoin:
… reached the psychological milestone of $120,000, representing a stunning 60% gain from April’s $75,000 lows. While this explosive growth might seem like typical cryptocurrency volatility, the underlying drivers suggest we’re witnessing something fundamentally different: a regulatory transformation that’s reshaping how traditional finance interacts with digital assets.
Indeed, July has been an enormous month for cryptocurrency in general and Bitcoin in particular. That’s why I’ve enlisted him to help me explain what’s going on…
And how to possibly take advantage of it.
Trump Signs the Cryptocurrency-Specific GENIUS Act
Last year, then former and hopefully future President Donald Trump rallied younger investors to his side with his cryptocurrency stance.
He even pledged at the 2024 Bitcoin Conference in Nashville that, if elected, crypto “rules will be written by people who love your industry, not hate it." Fast forward to July 18, 2025, and he signed the Guaranteeing Essential National Infrastructure in U.S.-Stablecoins (GENIUS) Act into law.
This, according to Nicholas, “is the most important cryptocurrency law in U.S. history. While it was certainly the force behind Bitcoin hitting $120,000, “its effects go beyond [that] recent rise,” starting with how “it deals with the reserve requirements for stablecoin issuers.”
For those of you, like me, who never heard of stablecoins before some Zoomer told you about it, they’re a specific crypto category where the coins are pegged to fiat currencies, commodities, or other financial instruments. The most popular ones are typically pegged to the U.S. dollar.
This makes them automatically less volatile and useful as both dry powder and collateral among crypto participants.
The GENIUS Act, Nicholas writes:
… requires [stablecoin] issuers to keep reserves equal to every dollar they issue. These reserves must come from insured bank deposits, short-term Treasury bills, or other assets approved by regulators. This approach creates a stronger foundation than many traditional banking products. The law also gives stablecoin holders priority over other claims in bankruptcy proceedings.
These are major incentives for traditional financial institutions to get involved – which, in turn, will legitimize the cryptocurrency space in powerful ways.
Nicholas also writes:
I think the most revolutionary aspect is how the Act explicitly classifies stablecoins as neither securities nor commodities, thereby exempting them from [Securities Exchange Commission] or [Commodities Futures Trading Commission] regulation… This creates what I consider to be a “third category” of financial instruments that can operate with greater flexibility while maintaining regulatory oversight.
And that, he reasonably believes, “opens the door for massive institutional adoption that was previously impossible due to regulatory uncertainty.”
Crypto Enthusiasts Are Ready for Institutional Adoption!
Institutional adoption – when big banks and large money managers accept an asset as legitimate – is an enormous catalyst. An asset or asset group’s prices and valuations can soar once the big guys let them into the respectable “club,” so to speak.
Adrian Fritz, who heads research at 21Shares, says, “We’re still in the early innings when it comes to institutional ownership.” He believes less than 5% of spot Bitcoin exchange-traded fund (“ETF”) assets are held by pension funds, endowments, and the like. Hedge funds and wealth management firms probably own another 10% to 15%.
There has been so much uncertainty and government hostility toward cryptocurrencies in the past for much more than that. For instance, Biden-appointed Securities and Exchange Commission Chairman Gary Gensler filed over 100 legal actions against crypto firms while in charge.
In addition, global governments are known for suddenly selling massive amounts of crypto all at once, triggering equally massive market drops in the process.
The GENIUS Act goes a long way in reducing the chances of that kind of damage. Which is why Bitcoin’s $120,000 achievement could very well be just the beginning.
One sure sign of confidence is PayPal’s (PYPL) decision on Monday to add a “Pay With Crypto” option. Businesses can now select one or more of 100-plus cryptocurrencies they’ll accept as payment.
(Incidentally, PayPal already has its own stablecoin, PayPal USD, that’s backed by the U.S. dollar.)
It will be interesting to see what other big businesses and institutions follow in its footsteps now that GENIUS is being rolled out. I’m absolutely positive there’s more to come.
Be Cautious if You’re Still a Crypto Newbie (or Even if You’re Not)
Having said all that, I’d still recommend caution…
Again, I won’t personally endorse cryptocurrency because I still don’t understand it enough. Real estate investment trusts, or REITs, are my area of market expertise.
What I love about real estate is that they are hard assets. You can see them, feel them, derive income from them. That’s not always the case with digital assets.
I often remind Nicholas that if it weren’t for data centers and energy – two sectors we cover widely at Wide Moat Research – there would be no crypto.
But here’s something we both completely agree on: You need to be careful about how much you put into any asset – especially one that’s not fully developed yet, like cryptocurrency.
First of all, remember what I said earlier about startups and how often they fail. The same is true of all these new coins popping up every other day. And that’s to say nothing about the flat-out cryptocurrency scams you can come across.
Just because it looks good doesn’t mean it is.
There are also ever-changing geopolitical factors to consider. As already briefly mentioned, the U.S. isn’t the only country that invests in crypto.
Nicholas wrote last week how:
Beyond regulatory clarity, Bitcoin is benefiting from broader macroeconomic shifts. Russia’s reported use of cryptocurrencies in oil trades with China and India to circumvent Western sanctions demonstrates Bitcoin’s emerging role as an alternative settlement mechanism. Additionally, with the Dollar Index (DXY) declining over 10% since February, Bitcoin has increasingly functioned as a currency hedge rather than merely a speculative asset.
But that can and no doubt will all change at some point. Probably multiple times over, both for good and bad.
As for other notable assets in the space:
Ethereum (ETH-USD) has surged 170% from April lows to $3,741, partly benefiting from its central role in decentralized finance and staking mechanisms. However, picking successful altcoins [i.e., anything but Bitcoin] requires significant research and carries substantially higher risk than Bitcoin itself.
That’s why he suggests “Bitcoin ETFs” for “those seeking exposure.” They “offer regulated, accessible entry points” for those not yet ready for “full custody control.”
Whether you choose to invest in crypto, of course, is up to you. As well it should be. Don’t let anyone pressure you into buying or selling it, least of all a crypto skeptic like me.
But even I’ll admit: The days of discounting this market are officially over. To quote my son one more time:
As traditional financial infrastructure continues integrating cryptocurrency capabilities, Bitcoin’s role as digital gold appears increasingly validated by both regulatory frameworks and institutional adoption. The $120 milestone may represent not just another speculative peak, but the beginning of Bitcoin’s maturation as a mainstream financial asset.
It’s a whole new era. Let’s navigate it wisely.
Regards,
Brad Thomas
Editor, Wide Moat Daily
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