Wealth director Ruffer has come out of his high-stakes bet on bitcoin after growing nervous about the “speculative frenzy” in cryptocurrency, but said he plans to keep digital assets as well. and defense against inflation.
The British fund manager is usually cautious turn the heads in the City of November when he took a position of about $ 600m in bitcoin. Since then, it has earned a profit of $ 1.1 billion when it sold the stake in 2021.
But the fund manager said the rush to speculation in the market this year – including huge demonstrations in the price of joke-based cryptocurrencies – has made the digital asset too hot to hold.
“It just seemed like this would be a time when it would be better to watch from the side than from the trenches,” said Duncan MacInnes, director of investment at Ruffer who helped manage his bitcoin stake.
Ruffer bought bitcoin when it was trading at about $ 15,000, and completed its exit in early April when the price was $ 55,000. Shortly afterwards, the prices of cryptocurrencies have plunged after Tesla, chief executive and former bitcoins advocate, Elon Musk expressed concerns about the environmental impact of token “mining”.
Even after an acute correction that left bitcoin at a three-month low at about $ 33,000 against the dollar, MacInnes said it is not tempted to buy the dip. “When something like dogecoin is always present [valued at] $ 40 billion, it’s hard to say the foam came out, ”he said.
Bitcoin is largely a speculative bet for some wealthy individuals and other small retail investors looking for quick returns. Ruffer’s investment was seen as the type of institutional adoption that could provide lasting support to investors, as investors looked for new ways to diversify portfolios and offset inflation risks.
But MacInnes said that when the price of bitcoin doubled from January to a peak around $ 60,000 in mid-April, the market seemed too broad. “You can see very clearly that there was an increase in speculative behavior,” he said.
An increase in leveraged debt-fueled stakes on cryptocurrencies and the influx of new retailers into the market added to Ruffer’s concerns. The rising price has also left less room for further growth to offset the risk of holding bitcoin, including the growing threat of regulation.
Ruffer, who manages about £ 24 billion mainly for institutions, wealthy individuals and charities, has turned gold funds into inflation-protected bonds and commodity stocks while trying to offset the risk of inflation. The wealth manager has returned about 20 percent, net of spending, in the last 12 months, with his bitcoin profits contributing about a sixth of that benefit.
Ruffer said bitcoin is still “on the menu” of potential investments for the future, as fund managers are looking for new sources of returns and diversification. MacInnes viewed the crypto boom in part as a reaction to the returns of ultra-low stocks, which raised the traditional portfolio structure by 60 per cent shares and 40 per cent bonds.
“The rise in the price of bitcoin has been quite rational in the sense that investors have to take increasingly drastic measures to protect themselves against inflation and understand what to do with 40 percent of their portfolio earning nothing.” said MacInnes. “The world is desperate for a new safe haven, well unrelated assets.”