Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy
prior to making financial decisions.
There has been a lot of interest in Bitcoin from professional investors amid the Bitcoin rally. This does not appear to be slowing down, with an increasing number of major hedge funds and companies joining in.
Now yet another investor has joined in, and no small one at that. Global asset management firm, Guggenheim Investments, filed an SEC amendment which would allow them to invest up to $500 million in Bitcoin. The announcements of major investment firms entering the Bitcoin space are now having a domino effect.
Trending: Institutional Investors Want Bitcoin
Guggenheim Partners is a major investment firm, with over $275 billion assets under management (AUM). It is well-known in the space, and its entry into the market could be a sign of things to come. The SEC filing stated,
The Guggenheim Macro Opportunities Fund may seek investment exposure to bitcoin indirectly through investing up to 10% of its net asset value in Grayscale Bitcoin Trust (“GBTC”), a privately offered investment vehicle that invests in bitcoin.
Specifically, Guggenheim will invest up to 10% of its net asset value in Bitcoin as part of its Macro Opportunities Fund. Bitcoin is the only cryptocurrency it will work with, with no plans for other assets. To clarify, it does use the terminology “may seek exposure”, but the intent is clear.
Guggenheim will do this through Grayscale Bitcoin Trust (GBTC), which is now an SEC reporting company. Grayscale itself has noted the increase in institutional investment in 2020, with its Ethereum Trust being particularly fruitful.
According to market analyst Kevin Rooke, this is $200 million larger than the next biggest position. This is a true indication of how significant the decision is, not the investment amount itself. Guggenheim does note in the filing that investment involves risk — but that exists regardless.
The arrival of the likes of Guggenheim and Microstrategy, among others, shows the legitimacy that Bitcoin has gained. There was a time when several of these institutions and companies would ridicule Bitcoin endlessly. Now they’re putting a handsome chunk of their portfolio into it.
What Does Guggenheim Mean for Bitcoin?
2017 was the year when retail investment started flowing in. 2020 will be remembered as the year when institutional investment started pouring in. There is no doubt that the support behind Bitcoin is now far weightier.
✅ Not sure how Bitcoin works? Learn about Bitcoin investing.
It’s not just the fact that these firms are investing in Bitcoin. Several major names, like Paul Tudor Jones and Stanley Druckenmiller, have also praised Bitcoin as an asset itself. This is a remarkable change in view of the asset from a few years ago.
This transformation in public perception, besides the funding, bodes well for the future of Bitcoin. It was once the case that just one or two companies would invest — and you would call them outliers. It’s now snowballing to the point where multiple companies are putting their money in.
This, if anything, indicates that Bitcoin is indeed digital gold. Professional investors are investing because they believe that it is a good hedge. The change in perception of Bitcoin as a legitimate asset is underscored by the arrival of companies like Guggenheim.
That is the most significant part of Guggenheim’s filing. This will likely be one of many filings going forward. Recent events suggest such firms no longer see Bitcoin as a get rich quick scheme; they see it as a safety asset.
The cryptocurrency market is now at a stage where doubts no longer exist. Bitcoin is considered a hedge against inflation and safety against economic downturns. The price surge that Bitcoin is experiencing will be bolstered as more companies join in.
Bitcoin’s performance in 2020, even before these companies invested, also indicates the presence of fundamental value. As 2020 comes to a close, 2021 looks bright for Bitcoin.
📈 Bitcoin is now available through many of the top stock trading apps.
What do you think of Guggenheim entering the market? Is this the start of a new wave of investments? Let us know in the comments below.