Ordinary investment companies are starting to predict an eruption for bitcoin.
British asset manager Ruffer (RICA.L) on Monday predicted the long-term adoption of bitcoin (BTC-USD) by traditional financial institutions. Separately, Citigroup said that the cryptocurrency could be at the tipping point of use.
Ruffer, which manages £ 21 billion ($ 28.3 billion) in investor money, revealed in November that it had taken a small position in bitcoin.
“We believe we are relatively early for this, at the foot of a long trend of institutional adoption and financing of bitcoin,” said the company on Monday.
Think of bitcoin’s bad reputation as a risk premium – as we go through the process of normalization, regulation and institutionalization, the compression of this premium can have a dramatic effect on the price. If we are wrong, bitcoin will return to the shadows. And we will lose money – this explains why we have kept the size of the position small but meaningful. “
Ruffer has invested just over 3% of its assets in bitcoin – worth around £ 600 million. The company owns bitcoin directly and has indirect exposure through shareholdings in Microstrategy (MSTR), a computer company that has invested more than $ 3 billion in bitcoin and cryptocurrency trading bank Galaxy Digital Holdings (GLXY.TO). That is, equity investments have increased more than 100% since November, while bitcoin itself has increased 90%.
The development helped Ruffer deliver a total return per share of 6.4% over six months to 31 December. That was almost twice as much as 3.3% growth a year earlier. Shares rose half a percent at the start of trading in London.
Ruffer said it had invested in bitcoin because it “provides something significantly different in the portfolio.”
“Due to zero interest rates, the investment world is desperate for new protected havens and uncorrelated assets,” the company said.
Citi (C) said in a separate research note on Monday that bitcoin could be “at the beginning of massive conversion of cryptocurrency into mainstream”. Bloomberg reported. The investment bank said that bitcoin could be “the choice for international trade”.
Ruffer is one of several large companies that have revealed investments in bitcoin in recent months. Square for paymentSQ) has invested more than $ 200 million in bitcoin since last October and Tesla (TSLA) said last month it had put $ 1.5 billion in bitcoin. In the same way as PayPal (PYPL), Mastercard (MA) and BNY Mellon have all said they will start offering bitcoin services to interested customers.
Bitcoin’s price has risen in line with the increase in attention. The world’s largest cryptocurrency has accumulated more than 400% in the last five months, reaching a new record high of over $ 58,000 last month. Bitcoin witnessed a pullback last week but traded up 5% to $ 46,996.38 on Monday morning.
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