By Hassan Mehmood (Saudi Arabia)
Jefferies is the latest investment company that plans to buy Bitcoin after reducing its gold holdings. It supports the narrative that people are moving their capital from gold into the top digital asset.
An official of the billion dollars investment firm unveils the future plans for purchasing the flagship cryptocurrency. Christopher Wood, the global head of equity strategy at Jefferies, says that the company is buying Bitcoin after dumping some amount of gold. The exposure to cryptocurrency will increase if the top cryptocurrency witnessed a price correction after recording an all-time high value.
Reduction of Gold from Portfolio
According to Wood, it will happen for the first time in years that the firm will add Bitcoin by releasing gold, which represents a 50% portfolio of Jefferies. He said:
“The 50 percent weight in physical gold bullion in the portfolio will be reduced for the first time in several years by five percentage points with the money invested in Bitcoin. If there is a big drawdown in bitcoin from the current level, after the historic breakout above the $20,000 level, the intention will be to add to this position.”
As per the data of Q3, the investment company is holding $51 billion in assets under management. Per the report, the BTC holdings will be transferred into a “long-only global portfolio.” As per the portfolio, the gold allocation will reduce from 50% to 45% by dedicating a 5% allocation to the top digital currency. 30% allocation of the portfolio is in the “Asia ex-Japan equities,” while 20% is in the mining stocks of gold.
However, Wood claims that gold is not going anywhere, but its adoption would increase because the central banks’ policies will increase inflation.
Over this initiative, market analysts Bruce Ng and Juan Villaverde believe that the flagship cryptocurrency has a lot of potential, and the entry of big institutions in the digital space would push its price value as well as market cap upward. They draw a scenario that if 10% of the value from government bonds ($30 trillion) goes into both top hedge assets, including Bitcoin and gold, then $3 trillion will add into the market caps of both assets.
“$1.5 trillion going into gold – which is 15% of gold’s market cap (now about $10 trillion). And…$1.5 trillion going into Bitcoin – which is 4.4 times its market cap (now about $338 billion).”
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