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Guggenheim Funds Trust is the latest in the line of major financial institutions to express interest in investing in bitcoin. On Friday, they submitted a regulatory filing to the U.S. Securities and Exchange Commission to allow their Macro Opportunities Fund to hold the rights to invest in up to 10% of its net value in the Grayscale Bitcoin Trust (GBTC).
The latest Wall Street player ready to invest in cryptocurrencies, Guggenheim Partners is a global investment firm with over $295 billion in assets and its Macro Opportunities Fund has net assets of $43.97 billion meaning that its 10% bitcoin investment can be up to $497 million.
Grayscale Bitcoin trust invests solely in the bitcoin and its shares serve as a proxy for investments in the biggest cryptocurrency. GBTC is, basically, a publicly-traded financial product tracking the price of BTC and functioning in a similar way to ETFs (exchange-traded funds). At the moment, it’s one of the largest platforms for crypto asset management and has assets worth over $9 billion under its management. They’ve been busy raising bitcoins for their investors through November and acquired an additional 15,114 bitcoins in total worth of $241 million. The COO of GBTC, Michael Sonnenshein, noted that the bitcoin is no longer a passing fade but a real and credible option for all investors.
In its filing, Guggenheim notes that it’s cautiously optimistic on the bitcoin but realizes several risks going forward with this investment. The highly volatile nature of this cryptocurrency is the main issue.
They admit the risk that BTC “could drop precipitously” due to several factors including regulatory changes, strong competition expressed in other coins, and a possible crisis of confidence in the bitcoin network.
It seems that the Guggenheim BTC exposure will be solely through the Greyscale vehicle and the Fund, according to the filing, doesn’t plan any further, direct or indirect, investments in cryptocurrencies.
The leading cryptocurrency is gaining more and more mainstream recognition, with a number of major Wall Street investment firms showing interest. This move puts Guggenheim and its CIO Scott Minerd in a company of renowned investors such as Paul Tudor Jones and Stan Druckenmiller, who already signaled their interest in bitcoin.
Paul Tudor Jones described BTC last month as “the best inflation trade.” His $22 billion BVI Global Fund has announced that they might invest a single-digit percentage of their total assets in the bitcoin futures.
Stanley Druckenmiller, a billionaire U.S. investor, is also going long on bitcoin and claimed in an interview with CNBC that the bitcoin could easily outperform the gold. Another big news going for bitcoin and driving its value is the decision of one of the major payment platforms,PayPal to start allowing payments in cryptocurrencies.
As the Federal Reserve is set to temporarily allow inflation over 25, bitcoin is seen as a hedge option because its decentralized nature can protect it from the rapid price growth.