30 Nov 2020 Anthony Lehrman
Guggenheim Hedge Fund May Invest $500 Million In Bitcoin
The traditional investment sector is continuing its passage into cryptocurrencies, as the latest investment giant, Guggenheim Partners, filed a note with the SEC claiming it reserves its rights to invest up to 10% of its $5,3 Billion Macro Opportunities Fund into the world’s crypto leader, Bitcoin.
Guggenheim Partners further clarified that “The Guggenheim Macro Opportunities Fund may seek investment exposure to bitcoin indirectly through investing up to 10% of its net asset value in Grayscale Bitcoin Trust (“GBTC”), a privately offered investment vehicle that invests in Bitcoin.”
Guggenheim’s decision is to enter the crypto sector with the help of the Grayscale Bitcoin Trust (GBTC). GBTC is a trust, enabling investors to trade shares without actually owning Bitcoin, as the trust is holding a vast amount of funds in pools. Nevertheless, Guggenheim’s note to the SEC shows that one of the largest hedge funds to date is confident about the future of Bitcoin. However, the investment company also cited some risks, involved in Bitcoin investments.
“In addition to the general risks of investing in other investment vehicles, described further below, the value of the Fund’s indirect investments in cryptocurrency is subject to fluctuations in the value of the cryptocurrency, which can be highly volatile,” the note states.
Further, in the note, Guggenheim emphasized that the technology behind Bitcoin is rather new, and the currency has a short history as a means of payment. Also, the investment firm noted that the speculative nature of Bitcoin and the regulatory uncertainty may limit the value of indirect investments by Guggenheim.
The investment company, established in the 1800s by the Guggenheim brothers, is the latest addition to the wave of institutional investors and big tech companies setting an eye at the world’s top cryptocurrency to date. Earlier in November, PayPal announced that the company would add crypto services to its payment and asset storing capabilities, with reports stating 100% of the new Bitcoin that enters circulation gets immediately bought out by the ex-Elon Musk company.
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