Ruffer: Bitcoin still ‘early’ despite huge 500% price rally

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British asset manager Ruffer has predicted bitcoin adoption by traditional financial institutions is just beginning—calling its entry in to the bitcoin market last year “early.”

Bitcoin has exploded over recent months, surging to almost $60,000 as investors have rushed to purchase cryptocurrencies.

Bitcoin price, which wobbled last week after Tesla chief executive Elon Musk warned it “seemed high,” has bounced back thanks to new institutional support.

“We think we are relatively early to this, at the foothills of a long trend of institutional adoption and financialisation of bitcoin,” Ruffer, which manages $28.3 billion of investor money, said in its report on Monday, mentioning it expects the bitcoin price to increase as the cryptocurrency becomes mainstream.

“Think of bitcoin’s bad reputation as a risk premium—as we move through the process of normalisation, regulation, and institutionalisation, the compression of this premium can have a dramatic effect on the price.”

Last year, Ruffer announced it had invested around 3% of its assets into bitcoin, buying bitcoin directly and stakes in major bitcoin-buyer MicroStrategy and crypto-focused merchant bank Galaxy Digital. Ruffer said its equity investments have more than doubled since November.

Last month, the combined value of the 18.6 million BTC tokens in circulation reached $1 trillion for the first time—double the $500 billion it started 2021 and far beyond its late-2017 high. Bitcoin’s rally has been put down to a combination of Wall Street institutional adoption, corporate interest, and retail traders piling into the market—with some saying it may have a lot further to go.

Bitcoin’s bull run has been helped by some high-profile investors naming it as a hedge against the inflation they see on the horizon due to record government money-printing in the wake of coronavirus-induced lockdowns. Central banks globally have promised to keep interest rates near zero to help encourage spending.

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