Guggenheim Partners wants in on bitcoin

Guggenheim Partners wants in on bitcoin
Written by:
Jayson Derrick
November 30, 2020
  • Guggenheim notified the investment community it could invest in bitcoin.
  • The fund could allocate up to 10% of assets to a bitcoin ETF.
  • Guggenheim is following the lead of other notable fund heavyweights.

Global investment giant Guggenheim Partners wants to get in on the bitcoin action and informed clients through a regulatory filing it could allocate up to 10% of its net asset value in a bitcoin ETF, Bloomberg reported.

Only interested in one ETF

According to the regulatory filing, Guggenheim is interested solely in gaining exposure to the popular digital currency through the Grayscale Bitcoin Trust (Btc) (OTCMKTS: GBTC). The ETF offers investors a pure-play on Bitcoin as the fund is solely invested in the currency. The ETF tracks the digital asset’s price minus any fees and expenses.

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According to the fund’s release, it views cryptocurrencies more broadly as “digital assets designed to act as a medium of exchange.” But now investment is void of any potential drawbacks. The fund notes that investments in digital currencies can suffer from extreme volatility and other factors related to what it notes is a “largely unregulated” exchange.

The fund also highlights potential downside from growing distrust in the Bitcoin network itself, according to Bloomberg. As such, the fund states it will “not invest, directly or indirectly, in cryptocurrencies” aside from the bitcoin ETF. 

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Not the first fund to show interest

Guggenheim’s exposure to bitcoin means it will join the ranks of other global notable funds who already dove into the bitcoin craze. Most notably, billionaire hedge fund guru Paul Tudor Jones bought bitcoin in May as a hedge against future inflation. 

He noted in a late October CNBC interview that an investment in bitcoin today is akin to buying shares of a tech startup. 

But similar to Guggenheim, Tudor Jones isn’t ready or willing to go in on bitcoin. He said in the interview his exposure to bitcoin stands at a “single-digit” compared to his total portfolio. Nevertheless, bitcoin is backed by “really smart people” who believe in the digital currency’s outlook.

The bitcoin backers are dedicated to making sure the currency will ultimately end up serving as a “common-place store of value.”

“That makes me even more constructive on it,” he said.

Another hedge fund heavyweight, Stanly Druckenmiller, opined that bitcoin is a superior investment versus gold. The digital currency was born 13 years ago but as each day passes it “picks up more of its stabilization.”

Similar to his peers, Druckenmiller’s exposure to bitcoin is small, especially compared to gold.

He said: “Frankly, if the gold bet works, the bitcoin bet will probably work better because it’s thinner, more illiquid and has a lot more beta to it.”