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Ruffer announced on Tuesday that it had sold its $600 million holding for $1.1 billion, citing worries about over-speculation in the cryptocurrency market.
Ruffer, a fund manager located in the United Kingdom, sold its $600-million Bitcoin (BTC) stake after becoming concerned about the cryptocurrency market’s speculative fervour, which included massive rallies in meme-based coins such as Dogecoin (DOGE).
The fund, which manages roughly $34 billion for wealthy clients and charities, started selling its cryptocurrency stash in December 2020, when the BTC/USD exchange rate rose to $25,000, the Sunday Times reported.
It continued selling as the pair established newer highs in January 2021, breaking past the $40,000 level. Ruffer had wound up its remaining Bitcoin position by April, netting $1.1 billion in profits from the sales, or an 83% return for the fund.
Ruffer’s Bitcoin dumps came at a time when analysts were forecasting higher prices for the flagship cryptocurrency. For example, JPMorgan predicted in a January research that Bitcoin/USD might reach $146,000 as it competes with gold to become the world’s largest inflationary hedge.
Scott Minerd, chief investment officer at Guggenheim Partners, has similarly advocated for a $400,000–$600,000 Bitcoin, claiming that the cryptocurrency would be able to mousetrap gold’s market in the long term.
Ruffer clarified that it would consider repurchasing Bitcoin as an insurance against inflation, with its investment director Duncan MacInnes telling the Financial Times that it would be assessing the markets “from the sidelines than from in the trenches.”
But for 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 say the froth has come out.”
Dogecoin, a satirical counterpart to Bitcoin, saw a stunning upward rise in 2021, rising 15,337 percent year to date at one point.
Tesla CEO Elon Musk’s supportive tweets emerged as some of the major triggers driving the Dogecoin price increase, as did a reshared July 2020 image depicting the cryptocurrency assaulting the global financial system.
However, the shopping craze died down in May after Musk referred to Dogecoin as a “hustle” on a Saturday Night Live episode. The wealthy entrepreneur’s reversal on the token sparked panic selling across the cryptocurrency market, implying that losers tried to cash out profits from still-profitable cryptocurrencies like Bitcoin.
Dogecoin dropped 30% immediately following Musk’s remarks. On Wednesday, the cryptocurrency was trading at a price that was more than 50% lower than its all-time high of $0.76.
“You could see very clearly that there was an increase in speculative behaviour,” MacInnes said, citing Bitcoin’s own climb from $30,000 to almost $65,000 during the Dogecoin retail craze. Nonetheless, he acknowledged that the benchmark cryptocurrency’s surge had some logic to it.
Bitcoin is now “on the menu.”
Investors were left without a superior conventional safe-haven asset due to lower-yielding bonds and devalued fiat currencies. As a consequence, their standard 60/40 portfolio approach produced no results, prompting them to seek for “new safe-haven, uncorrelated assets” such as Bitcoin.
Ruffer has switched its money to anti-inflation assets comparable to Bitcoin, such as gold, inflation-protected bonds, and commodities stocks. The company stated that it will keep Bitcoin “on the menu” in the future.