The fund giant cuts bitcoin stake after Elon Musk’s tweets spark a frenzy: Ruffer is capitalizing on price hikes with a huge sale – so is the bubble expected to burst?
Fund manager Ruffer sold the majority of his Bitcoin holdings after Twitter posts by billionaire entrepreneur Elon Musk sent the price of the cryptocurrency soaring, The Mail on Sunday revealed.
Ruffer, a conservative asset management company, surprised the city in November when it invested 2.5 percent of its clients’ money – worth $ 600 million (£ 433 million) at the time – in bitcoin.
Since then, the price of Bitcoin has risen from $ 15,000 to $ 56,200, after hitting a record high of $ 63,000 last month. Raver took some profits earlier this year after the value of his investments doubled.
Influencer: Tesla founder Elon Musk earned $ 1.5 billion on Bitcoin
The sale left Ruffer about $ 700 million invested, or about 3 percent of its total assets.
A source close to the £ 22.2 billion asset manager said he had cut his investment to less than 0.5 per cent of his total investment, which is no more than £ 110 million.
Ruffer is understood to have started selling Bitcoin after Tesla – the electric car company Musk founded – announced a $ 1.5 billion purchase of Bitcoin in February and said it would start accepting cryptocurrency as a method of payment.
The source described it as a “sign of a bubble”.
In January, Musk – who has more than 52 million followers on Twitter – changed his Twitter profile to include the word Bitcoin, increasing the value of the cryptocurrency by about a fifth on the same day. The South African businessman tweeted at the end of April that he had not sold any of his bitcoin, although he said that Tesla sold 10 percent of its investment to demonstrate the ease of selling and is an “ alternative to holding cash. ”
Hector McNeill, founder of HANetf, said: “ Elon tweets a lot of things and he’s also right about a lot of things.
What I’ve seen over the past six months is how Bitcoin became mainstream. For every investor who withdraws, ten others participate.
“We do some trading in it, instead of investing in it, just to understand it,” said a senior fund manager at one of the largest groups of funds in the world. “It’s kind of a wait-and-see, like an investment asset class.
One analyst said the rise in the price of Dogecoin, another cryptocurrency, was a sign of a bubble in the cryptocurrency, adding that it could burst once investors’ excess liquidity begins to diminish and lead them to sell.
Dogecoin is trading at 36 cents. It was less than 10 cents earlier this year. Ruffer explained that the rationale for buying Bitcoin was to increase interest from other fund giants such as Fidelity and BlackRock and the larger companies including Mastercard and PayPal.
The analyst said Bitcoin is seen as an alternative to gold, which is seen as a store of value when inflation starts.
The investment firm is believed to have secured its Bitcoin holdings through Coinbase, the cryptocurrency exchange listed on the Nasdaq Stock Exchange, last month, with a value of $ 75.9 billion.
Earlier this year, Raver said: “Because of zero interest rates, the investment world is in dire need of new safe havens and unrelated assets.
“We think we’re relatively early on, at the foothills of a long trend of institutional adoption and Bitcoin financing.” “The speed of building the institutional infrastructure around the cryptocurrency has been intense, even while we were exposed to Bitcoin,” Alexander Charter, fund manager at Ruffer, told the investment site Citywire.
A key part of investing in Bitcoin, Sharter said, is that investors will “increasingly want lifeboats in a sea of printing money” while they look for returns on their money. He added, “More and more managers will see bitcoin and solid digital assets as part of this solution.”
Reports last week that the German government may allow wealth managers to invest in cryptocurrencies were another sign that bitcoin is becoming a more popular investment.
Bitcoin reached a record high last month on the same day Coinbase was listed. Analysts at JP Morgan said that using Bitcoin as an alternative to gold and its limited supply could see it rise above $ 146,000 in time.
Analysts added: “The Bitcoin competition with gold has already started on our minds.”
Ruffer declined to comment on its decision to scale back its Bitcoin holdings.