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Asset managers continue to view bitcoin as a key portfolio diversification tool

Many financial institutions have begun to include Bitcoin in their investment strategies, highlighting the growing acceptance and interest in the asset as a form of alternative investment.

Date: 2024-03-26 Author: Łukasz Michałek
Asset managers continue to view bitcoin as a key portfolio diversification tool

Recognizing the potential benefits of Bitcoin ‘s role as a portfolio diversifier, asset managers are increasing their Bitcoin allocations.

In a recent note, crypto asset trading firm QCP Capitalrevealed that asset managers continue to add Bitcoin allocations as a “portfolio diversifier.”

In addition, inquiries have come in for structured products such as accumulators and FCNs, revealing a strong appetite for diversifying investment portfolios with BTC, the Singapore-based firm wrote.

“Wealth offices at major banks were pleasantly shocked by the huge demand from clients for BTC ETFs, as well as requests for structured products such as accumulators and FCNs.”

Bitcoin in $100,000 rally

Bitcoin recently surpassed $70,000 following news that the London Stock Exchange plans to launch exchange-traded notes (ETNs) for BTC and ETH in May. However, QCP expects the leading cryptocurrency to maintain its momentum, beating record highs and potentially reaching the coveted $100,000 level.

He noted that amid the unpredictable nature of the market, Bitcoin ‘s ability to offer potential returns independent of traditional assets has become an attractive proposition for managers.

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Meanwhile, Bitcoin’s potential to continue its upward trajectory may depend on broader macroeconomic factors. Unless there is a significant shift in the market towards risk aversion, many analysts believe that another rise in BTC is becoming increasingly inevitable.

With this in mind, the QCP report offers two trading concepts for consideration. First, the BTC Spot-Forward basis is currently elevated, with front-end yields in excess of 20%, creating an opportunity for strategic positioning in the market.

Second, the implementation of accumulators, which allow investors to purchase BTC at a discounted price, may prove beneficial compared to the anticipated interest from traditional financial players.

At the time of this writing, the leading cryptocurrency is trading at $70,584, up 5.12% over the past 24 hours.

The flagship cryptocurrency is up nearly 9% over the past week and about 37% over the past month. Only 4.6% separates it from its all-time high of $73,750 registered on March 14.

LSE launches bitcoin ETN

The LSE announced plans to debut exchange-traded notes (ETNs) for Bitcoin and Ethereum on May 28. The decision follows the exchange’s earlier announcement that it would accept applications for cryptocurrency ETNs in the second quarter of this year.

According to a notice issued by the LSE, companies interested in listing their bitcoin and Ethereum ETNs on the new market can begin submitting applications from April 8, marking a significant step forward toward widespread adoption of the digital assets.

While both ETFs (exchange traded funds) and ETNs offer exposure to a set of assets, they differ in structure.

Like a basket of stocks, ETFs are part ownership of the underlying assets. Investors buy ETNs because they give the bank money in exchange for a promissory note that guarantees a return based on the performance of the asset or index.

It is worth noting that the FCA will control the upcoming Bitcoin and Ethereum ET Ns on the LSE, which will limit participation to “professional investors” only. This term includes credit institutions and authorized investment firms that operate in the financial markets, while preventing retail investors from using these ETNs.

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Łukasz Michałek
Łukasz Michałek
Founder of the rapidly developing cryptocurrency channel "Biblia Kryptowalut" on YouTube. He also co-creates the Arena Trading group with Marek. Łukasz is fascinated and passionate about blockchain technology and cryptocurrencies, which constitute the central element of his activity in the cryptocurrency industry.
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