Billionaire banker Ken Moelis says the bitcoin craze is like the gold rush of 1848 - and the meme stock frenzy is down to its entertainment value

• Billionaire banker Ken Moelis compared the cryptocurrency obsession to the gold rush of 1848.
• His investment bank is focused on having crypto expertise before diving into the space, he said.
• Most of the meme-stock frenzy is just for fun, and those ending up with losses will accept it, he said.

Investment banker Ken Moelis likened the bitcoin craze to the California gold rush at a Bloomberg summit this week, and said he's eyeing the cryptocurrency space for business opportunities, just as Levi Strauss did for miners in 1848.

Moelis, who founded the boutique investment bank Moelis & Co, said he was personally open to investing in crypto, but his firm is more focused on having expertise before diving into it. "It's a big market, there's a lot of capital in there, there's a lot of projects," he said, adding that he remains cautious of taking his firm into the space.

More-traditional banks have until recently taken a watchful stance toward bitcoin and other mainstream cryptocurrencies. But an explosion of adoption by major banks such as Goldman Sachs and of new deals in the area has solidified the establishment of a whole new asset class in the financial world.

"It's like the gold rush of 1848. A lot of people didn't know if there was gold in the ground, but Levi's made a business selling jeans and Wells Fargo made a banking business," Moelis said at the summit. "I believe our business is selling the picks and the shovels, so we have to know what people want - what picks and what shovels they need, what tools they need to be successful."

In 1848, the discovery of gold flakes in a California stream unleashed the largest migration in the US by would-be miners attracted by the prospect of massive wealth. Likewise, the huge gains logged by bitcoin since its inception has attracted an ever-growing legion of fans to cryptocurrencies, with some previous major detractors like Howard Marks changing their outlook. In March, online brokerage Etoro reported it had added over 5 million new bitcoin-focused users in 2020, and as of 4 January, it had 61% more bitcoin holders on its platform year-on-year.

Moelis also shared what he thinks about the meme-stock frenzy, which has seen retail investors band together on social platforms to buy and hold targeted stocks such as GameStop, often with the aim of pitting themselves against Wall Street. He said his own children are actively involved in the trend, and that they regularly update him on certain stocks.

"They're just having fun - I think 70 to 80% of this is fun," he said. "When you go to a casino, the most boisterous, loudest craps table is always the one where everyone runs over because someone has made their point, they've predicted something."

But he said there will be some who bet beyond what they can afford. "At every craps table, 70 to 80% of the people, they know they're having fun, and know they're going to lose their money, and accept it. There is somebody who's going to lose their mortgage."

For a more in-depth discussion, come on over to Business Insider Cryptosphere — a forum where users can deep dive into all things crypto, engage in interesting discussions and stay ahead of the curve.

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