Digital Assets: Bitcoin Scales $20K; Ruffer UK Bought £550M Of Bitcoin In November
After taking out the $20K resistance bitcoin is in uncharted territory.
Bitcoin is in the history books today after it suddenly sliced through the key $20,000 resistance like a hot knife through butter. It is now trading above that psychological level for the first time. As this is being written, the cryptocurrency is perched at $20,675, up 5.97%. It has now taken out its previous all-time high achieved on December 1, 2020, even as news breaks of yet another massive institutional investment, this time by Ruffer UK.
Institutions are credited with this solid rally in bitcoin, the leading cryptocurrency. Pointers such as record open interest in the futures markets and the increasing premium of the Grayscale Bitcoin Trust show the likely handiwork of institutions.
Bitcoin – change in perception
Bullish analysis by top firms such as JPMorgan places bitcoin on a pedestal above gold. Institutions are veering around to the view that the crypto may be a new and relevant asset class given the current global macroeconomic conditions.
Corporates such as MicroStrategy (NASDAQ: MSTR) and Square (NYSE: SQ) have already parked millions of dollars of their treasury reserves in bitcoin. Their primary motive – to hedge against the depreciating purchasing power of money that could wipe out their hard-earned earnings in time to come.
Institutions are now following the lead of the corporates. Earlier this week, MassMutual announced that it had invested $100 million in bitcoin. It said it wanted to achieve diversification and buy “measured yet meaningful exposure to a growing economic aspect of our increasingly digital world.”
Analysts at JPMorgan reacted to the news by saying that “adoption of bitcoin was spreading from family offices and wealthy investors to insurance firms and pension funds.”
“One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example,” the analysts wrote.
“If pension funds and insurance companies in the US, euro area, UK and Japan allocate 1% of assets to bitcoin, that would result in additional bitcoin demand of $ 600 billion,” they added.
A Reuters report last week cited CoinShares data and said that institutional investors pumped in $ 429 million into cryptocurrency funds and products for the week ended December 7. This was the second-highest inflow on record and led to an all-time high in institutional holdings of $ 15 billion.
Ruffer boards the bitcoin express
News also broke today that U.K.-based Ruffer Investments bought £550 million worth of bitcoin in November. (CoinDesk)
“Ruffer’s exposure to bitcoin currently totals around £550m, equivalent to around 2.7% of the firm’s assets under management,” a spokesperson told CoinDesk in an email.
At current exchange rates, that investment is worth $744 million.
Ruffer said it invested in bitcoin as a hedge against “some of the risks that we see in a fragile monetary system and distorted financial markets.”
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