UK-based fund manager Ruffer liquidated its $ 600 million Bitcoin (BTC) bet after getting nervous about the speculative frenzy in the cryptocurrency market, including huge rallies in meme-based tokens like Dogecoin (DOGE).
The fund, which manages roughly $ 34 billion for wealthy clients and charities, began selling its cryptocurrency supply in December 2020 when the BTC / USD exchange rate rose to $ 25,000, the Sunday Times reported.
Sales continued as the pair hit newer highs and broke the $ 40,000 mark in January 2021. Ruffer had liquidated its remaining Bitcoin position by April and made a profit of $ 1.1 billion on the sales or an 83% return for the fund.
Ruffer’s sequential bitcoin dumps appeared at moments when analysts predicted higher valuations for the flagship cryptocurrency. For example, JPMorgan said in a report released in January that BTC / USD could soar to $ 146,000 as it competes with gold to become the world’s leading inflation hedge.
Scott Minerd, chief investment officer at Guggenheim Partners, also called for a bitcoin of $ 400,000 to $ 600,000, believing the cryptocurrency would be able to mousetrap the gold market in the long run.
Ruffer made it clear that it would consider buying back Bitcoin as inflation insurance, with investment director Duncan MacInnes telling the Financial Times that it would judge markets “from the sidelines rather than the trenches.”
But right now, MacInnes agreed, Bitcoin is too hot to hold, especially when Dogecoin, a joke-based cryptocurrency, is valued at $ 40 billion. He said:
“It’s hard to tell the foam came out.”
Dogecoin, a satirical homage to Bitcoin, saw a wild upward rally in 2021 when it rose 15.337% year-to-date.
Supportive tweets from Tesla CEO Elon Musk were some of the leading catalysts for the Dogecoin price rally, including a re-shared July 2020 meme showing how the cryptocurrency is storming the global financial system.
It’s inevitable pic.twitter.com/eBKnQm6QyF
– Elon Musk (@elonmusk) July 18, 2020
But the retail craze began to die out in May after Musk referred to Dogecoin as a “crush.” Saturday night live Episode. The billionaire entrepreneur’s U-turn on tokens led to panic selling across the cryptocurrency market, suggesting loss-making traders were trying to cash out profits on still profitable cryptocurrencies like Bitcoin.
Dogecoin fell 30% immediately after Musk’s testimony. On Wednesday, the cryptocurrency was trading more than 50% below its all-time high of $ 0.76.
“You could see very clearly that speculative behavior has increased,” said MacInnes, pointing to the rise in Bitcoin from $ 30,000 to nearly $ 65,000 amid the Dogecoin retail craze. Even so, he added that at least the benchmark cryptocurrency boom had some rationality.
Bitcoin “on the menu”
Lower yielding bonds and devalued fiat currencies left investors without a better traditional safe haven. As a result, their traditional 60/40 portfolio strategy did nothing, leading them to “new safe havens, uncorrelated assets” like Bitcoin.
Ruffer has switched its funds into Bitcoin-rival anti-inflation investments, including gold, inflation-linked bonds and commodity stocks. The company claimed it would keep cryptocurrency “on the menu” for the future.