British investment management firm Ruffer has announced that its Bitcoin holdings now represent around 3% of its total portfolio of around $ 29 billion. The company believes that we are “at the foot of a long trend of institutional adoption and financialization of Bitcoin”.
A long trend of the institutional adoption of Bitcoin
Ruffer released an update on the company’s Bitcoin investment this week in the Investment Manager’s report for the period ended December 31. The company wrote:
We gained our Bitcoin exposure through the Ruffer Multi Strategies Fund and two proxy stocks in Microstrategy and Galaxy Digital. At the end of the reporting period, the combined exposure of these companies was just over 3%.
The company noted that “in the short time since investing, both stocks have risen more than 100% and Bitcoin has risen 90%.”
On his website, Ruffer stated that his assets under management as of December 31 were £ 21 billion (approximately $ 29 billion). A 3% allocation would mean the company’s Bitcoin holdings are now valued at around £ 630 million ($ 861 million). Some media reported that Ruffer’s Bitcoin exposure is now at £ 1 billion ($ 1.4 billion). However, a Ruffer spokesperson confirmed to news.Bitcoin.com that the company does not recognize this estimate.
Ruffer announced in November that it had bought Bitcoin for £ 550 million ($ 750 million), initially equivalent to 2.5% of the company’s total portfolio.
“Our rationale was well publicized, but we have used unconventional protections in our portfolio in the past. This is another example, a small mapping to an idiosyncratic asset class that we believe will change the portfolio significantly, ”added Ruffer, adding:
With zero interest rates, the investment world is desperate for new safe havens and uncorrelated assets. We believe we are relatively early, at the base of a long trend of institutional adoption and financialization of Bitcoin.
While recognizing the risks associated with Bitcoin, Ruffer is seeing increasing signs of ramp-up that the company believes will have a significant impact on the price of the cryptocurrency.
“Think of Bitcoin’s bad reputation as a risk premium. As we go through the process of normalization, regulation, and institutionalization, the compression of that premium can have a dramatic impact on the price,” said Ruffer. “If we’re wrong, Bitcoin will go back into the shadows and we’ll lose money – this explains why we kept the position size small but sensible.”
Ruffer chairman Jonathan Ruffer said last week that the company’s announcement regarding its Bitcoin exposure “produced a few responses”. He explained:
Our underlying reasoning is that when fiat currencies get kerplunked, bitcoin becomes a challenger to gold being viewed as the only overcurrency to own.
The chairman said his company had “done a lot of work to assess the risk of investing in Bitcoin” and “watched it for a long time”. His firm concluded that “it’s a unique beast as an emerging store of value that combines some of the benefits of technology and gold,” emphasizing, “Yes, it’s a seemingly nonsensical asset – but one that absolutely makes sense for it how we see the world. “
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