Eric Peters and One River's Digital Asset Investment Theory: Why Traditional Investors Should Rethink?

Eric Peters is the CEO and Chief Investment Officer of One River Asset Management. One River is renowned for securing investments from billionaire Alan Howard and has purchased over $600 million worth of Bitcoin. Recently, this industry leader published a letter to traditional investors, delving into why investing in digital assets is not only reasonable but also a necessary choice in today’s economic landscape.

Imagination Drives Progress and Investment Decisions

The greatest human ability is to imagine a better tomorrow. From the Stone Age to the Space Age, it is this longing for the future that has propelled human civilization forward. Eric Peters believes that the essence of investing lies in this—identifying macro trends and making decisions based on our imagination of the future.

Currently, there are two unstoppable mainstream trends worldwide: one is astonishing technological advancement, and the other is the deepening global interdependence of trade. These forces connect nearly 8 billion people in unprecedented ways, enabling real-time exchange of knowledge, information, and collaboration. Meanwhile, population growth is slowing, and developed economies are gradually aging, creating a deflationary environment—though seemingly beneficial for capital holders, government inertia in responding to economic crises continues to exacerbate inequality.

Every time governments face economic disruptions, they adopt a combination of policies such as lowering interest rates, increasing debt, and leveraging. These measures push asset prices higher but also sow the seeds of systemic fragility. This is a reflexive process—each crisis demands more aggressive monetary stimulus, which in turn creates the breeding ground for the next crisis. In short, it’s a case of “living beyond one’s means.”

Money Is the World’s Greatest Illusion; Digital Assets Redefine Value

During the global recession of 2020, Western governments launched an unprecedented stimulus model: issuing massive bonds purchased by central banks, using central bank-created funds for payments. This is a familiar historical pattern—governments attempt to reduce debt burdens by devaluing the currency they borrow in.

But Eric Peters points out a fundamental truth: Money is not real, and it never was. The value of money entirely depends on our collective belief. The Federal Reserve claims it will devalue the dollar at 2% annually, but over the past decade, it has failed to meet this target. The reason for failure is not due to lack of effort but a fundamental misunderstanding of money’s nature.

Even gold is not true currency. For thousands of years, people believed gold had value simply because everyone believed so. But gold has a fatal flaw: it is constantly being mined. In 2005, global gold mining produced 2,470 tons; by 2019, it increased to 3,300 tons. With advances in mining technology, this rate will accelerate. In just a few decades, humans might even mine gold from asteroids. This means gold supply increases by 1-2% annually, leading to a permanent devaluation of its value.

Bitcoin: Scarcity Embedded in Code

In 2009, Bitcoin mysteriously appeared—a true black swan. The underlying technology of the Bitcoin blockchain is not itself innovative, but their combination has brought about a revolution.

Unlike all traditional commodities like gold, Bitcoin’s supply is permanently capped. Bitcoin issuance follows a predetermined schedule, halving every four years until 2140 when the last Bitcoin is mined. More importantly: when Bitcoin’s price rises tenfold or even a hundredfold, its supply does not increase. This creates an unprecedented asset class in history—fixed supply but no intrinsic value, yet potentially priceless through collective imagination.

As of January 2026, Bitcoin’s price has reached $89.87K, with a record high of $126.08K. In a world where fiat currency can be created infinitely, this absolute scarcity asset is gaining recognition among more and more people. Industry experts suggest that Bitcoin could gradually compete with the gold market in the next decade, even surpassing its value.

Governments Cannot Destroy It; Participation Is Increasing

Initially, Eric Peters worried that governments would not allow Bitcoin to exist long-term because they would never relinquish their minting rights. He anticipated that governments would introduce digital versions of official currency, destroying private digital currency systems.

But over time, the situation has become increasingly complex. The widespread adoption of Bitcoin and Ethereum, along with rapidly developing blockchain ecosystem innovations, makes it harder for governments to destroy these systems. More and more of the smartest and most ambitious entrepreneurs see Bitcoin and Ethereum as future financial technology platforms, building Layer 2 applications on top to improve the functionality, speed, and efficiency of public chains.

This creates a positive feedback loop: more participants → stronger systems → increased difficulty for governments to destroy → governments choosing coexistence rather than confrontation. In this process, allowing digital assets to coexist with digital dollars aligns with national interests, making it more rational to encourage rather than suppress private digital currencies.

Traditional Portfolios Cannot Meet Today’s Challenges

Current mainstream portfolios consist of stocks and bonds. But this allocation faces a fatal risk: inflation.

Bond yields are at historic lows, and stock price-to-earnings ratios are near record highs. Investors need an annual return of 7% to avoid bankruptcy, and many leverage to amplify gains. During recessions, bond returns are unlikely to offset stock losses. During inflation, bonds suffer losses. Historical experience shows that losses in bonds are often followed by losses in stocks. During stagflation—recession with inflation—traditional securities investments could be disastrous.

Over the past decade, governments have not implemented significant inflation policies. But the global pandemic changed all that—governments worldwide engaged in unprecedented scale monetary and fiscal stimulus. Such large-scale policies are difficult to reverse. Even if the US government adopts austerity measures causing economic crises, calls for more aggressive currency devaluation will immediately re-emerge, with even greater force.

Adding digital assets to a portfolio is attractive because they help mitigate currency devaluation risk without suffering negative returns from passive waiting.

Blockchain Is Building the Future of Human Finance

The final transformation is reflexive—each day, more of the world’s smartest people are dedicating themselves to this work. These collaborators, strangers to each other and unaware of each other’s identities, share a common belief. They are improving code that supports digital assets, building frameworks that integrate with traditional finance, and creating new products and features in ways never seen before.

Whenever the system exposes vulnerabilities, confidence may waver, but more talented engineers and entrepreneurs will step in to repair. Good money drives out bad, and use cases continue to expand. As these forces interact in complex ways, our confidence in these new systems grows, driving their value upward. This, in turn, attracts more participants, further strengthening system resilience. Bitcoin has already experienced six cycles of wild swings, each time emerging stronger.

Blockchain technology provides humanity with a way: to build confidence in entirely new systems—a system residing in the cloud, becoming stronger and more resilient as interactions increase. As these visions come true, the systems become increasingly valuable.

High Convexity Bets, Low-Risk Allocations

Holding digital assets long-term will keep investors aligned with two major macro trends: technological progress and currency devaluation. Both forces seem to be accelerating. Digital assets can not only reduce downside risk in portfolios but also give investors exposure to humanity’s latest “black swan”—a new technology reshaping our understanding of money.

This is the last inversion of today’s upside-down world: only in such a strange moment can investors make high-convexity bullish bets on a brighter future for humanity while avoiding severe consequences from policy missteps.

The value of Bitcoin can easily surpass gold. No matter how high Bitcoin ultimately rises, in a world of unlimited money creation, the actual utility of these digital assets will continue to grow, and their appreciation could far exceed expectations. The future financial landscape and valuation methods will be determined by our collective imagination. And as Eric Peters states, human imagination has always been the most powerful force in the universe.