Credited investors worried about possible runaway inflation poured millions into Bitwise's bitcoin fund as a strategy to preserve the value of their wallets.
A document filed with the Securities and Exchange Commission (SEC) last week showed that the asset manager had raised, in total, just under $ 8,9 million for his Bitcoin Fund, which provides accredited U.S. investors with exposure. to bitcoin through a traditional product.
This marks the largest increase in assets recorded in the fund's two-year history. A 2019 report shows that the Bitcoin Fund had accumulated $ 4,1 million investments, which means the fund has more than doubled in size over the past year.
Investors aim for Bitcoin as an alternative haven
While bitcoin has made great strides in gaining credibility in the traditional investing community, Bitwise's head of research Matthew Hougan said the most likely cause of the fund's surge in activity stems from widespread concerns about runaway inflation.
“With the unprecedented expansion of the Fed's balance sheet, the sums committed to fiscal stimulus and the Fed's new and significantly more accommodative inflation policy, [Bitwise's clients] are seeking hedging,” he said in a statement.
"Bitcoin is the most efficient hedge for inflation that exists in today's market," he added. Fiscal stimulus has become a prime tool for governments and central banks struggling to keep economic activity alive during the pandemic crisis. The Federal Reserve initially pumped more than $ 2,8 trillion into the economy and lowered interest rates to minimal rates.
The specter of runaway inflation
As Congress discusses another $ 2,4 trillion stimulus package in the run-up to the November election, Fed Chairman Jay Powell said this month that the central bank is unlikely to tighten monetary policy for at least three years. and it will even tolerate inflation above 2% to compensate for the drop in retail prices during the peak of the pandemic.
Hougan said many of Bitwise's clients were financial advisors serving wealthy investors, themselves wary of the debilitating effects inflation can have on their portfolios.
Many investors see the fixed supply of 21 million Bitcoins as a means of preserving the value of their savings in the event that too lenient monetary policy leads to uncontrolled inflation.
In fact, other fund managers have experienced similar spikes in demand from the same wealthy investor environment. In the summer, $ 250 million went into three funds managed by the New York Digital Investments Group (NYDIG); Pantera Capital told the SEC in August that it had received nearly $ 165 million in placements from qualified investors.
