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Who will be the first state to invest in BTC?

Photo of: Joseph Stone
by Joseph Stone

Central banks are on a crusade against Bitcoin. Their criticism is not shared by sovereign wealth fund managers. Several would consider investing in BTC.

Agustin Carstens, the head of the Bank for International Settlements (BIS), has been attacking cryptocurrencies and Bitcoin in particular for several years now. Among the central banks’ staffs, this discourse is widely shared.

On the other hand, on the side of sovereign wealth funds, the feeling would be quite different. This is what the head of a significant digital asset manager, New York Digital Investment Group (NYDIG), reports.

Robert Gutmann reports that the company is in discussions with sovereign wealth funds with a view to investing in Bitcoin. Such adoption would be a major step in the democratization of BTC among institutions

It would not be the first step for such players, however. Singapore’s sovereign wealth fund, Temasek, is said to already be a Bitcoin investor. According to Raoul Pal of Real Vision, Temasek has acquired BTC directly from miners.

Remember that this sovereign wealth fund has nearly $306 billion in assets. It is not clear how much of this would have actually been allocated to Bitcoin. It’s not clear whether the politicians of the major powers see these allocations in a positive light either.

The calls for regulation are multiplying. And this at a time when the value of Bitcoin is showing record prices and a growing number of institutional and financial players are interested in the crypto-asset, at the expense of fiat currencies.

But for Robert Gutmann, this trend is not ready to stop. On the contrary, he assures, investors are currently reassessing their portfolios.

It’s “reasonable to ask yourself, as an investment committee or allocation committee, [whether] having all [their] dollar-denominated assets against dollar-denominated liabilities is the right allocation mix,” the executive points out.

Bitcoin’s high volatility, however, could be a non-negligible obstacle. At least that is the argument of its main detractors. But these sharp declines in the asset are also opportunities to acquire Bitcoins at cheaper prices.

Bitcoin’s average annual change is 69%. This compares to 27% for silver, 13% for gold and about 20% for stocks. But since the launch of BTC, this volatility has been reduced. It was on average 400% years ago.