Guggenheim is set to join the cryptocurrency craze

Guggenheim claims that while the cryptocurrency leaps to new highs, it might invest up to $530 million in a bitcoin trust.

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Michael Sonnenshein joins “Squawk Box” on CNBC to discuss a potential $530 million investment from Guggenheim in bitcoin.

Guggenheim Partners is the newest Wall Street company to demonstrate interest in Bitcoin, and Friday’s regulatory filing signals could allow a huge investment in cryptocurrency. In a Securities and Exchange Commission filing released on Friday, Guggenheim reported that its Macro Opportunity Fund had the right to invest up to 10 percent of its net asset value in the Bitcoin Trust of Grayscale. The trust invests strictly in Bitcoin, enabling its shares to act as the common cryptocurrency’s proxy. 

Around $5.3 billion in assets are held by the fund, making a 10 percent stake worth around $530 million.

Guggenheim described cryptocurrencies as “digital assets designed as a medium of exchange.” The company added that it had no other plans to invest directly or indirectly in cryptocurrencies, although it could gain exposure to Bitcoin through the Grayscale trust. 

On Monday, Bitcoin reached a new high, surpassing the $19,511 record set in December 2017. Before paring, the token leapt to $19,873.23.

Guggenheim meets other heavyweights of Wall Street who have been bullish in the unpredictable token. The former hedge fund manager, Mike Novogratz, who had pushed a long time for the widespread use of cryptocurrencies, praised PayPal’s decision to embrace them in October and called this a “exciting day” for technology.

“All banks will now be on a race to service crypto,” he tweeted on October 21. “We have crossed the rubicon people.”

Last month, the billionaire investor Paul Tudor Jones also endorsed Bitcoin, calling the asset “the best inflation trade.” With the Federal Reserve expected to temporarily enable inflation above 2%, Jones said the decentralized nature of Bitcoin prevents its value from higher price rise. Last month, the billionaire investor Paul Tudor Jones also endorsed Bitcoin, calling the asset “the best inflation trade.” With the Federal Reserve expected to temporarily enable inflation above 2%, Jones said the decentralized nature of Bitcoin prevents its value from higher price rise.The filing by Guggenheim shows that the company is positive about Bitcoin but also sees some threats to the run-up of the coin. A Bitcoin stake could fall prey to its “highly volatile” nature, the company said in the filing. It added that the value of the cryptocurrency “could drop precipitously” for reasons including regulatory changes, a change in user preference to a competing token, or a “crisis of confidence” in the Bitcoin network.

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