In a recent announcement, global investment bank Jefferies has declared Bitcoin (BTC) to be a robust safeguard against currency devaluation and the ongoing rise in inflation rates. At the time of this report, Bitcoin is maintaining a price level of approximately $27,961.
Jefferies, a renowned player in the world of global investment banking, has issued advice to long-term investors, especially pension funds, advocating for an allocation of 10% of their portfolios to Bitcoin, with values denominated in U.S. dollars. The bank has underscored the importance of viewing investments in Bitcoin and gold as insurance strategies rather than short-term speculative trades.
The bank’s assessment rests on the premise that efforts to tighten monetary conditions will encounter prolonged delays in the current economic cycle. This is attributed to the significant expansion of the money supply since 2020. Christopher Wood, Jefferies’ Global Head of Equity Strategy, has voiced concerns regarding the ability of G7 central banks, including the Federal Reserve, to smoothly transition away from unconventional monetary policies. He suggests that these central banks are likely to continue expanding their balance sheets through various means, emphasizing the need for strategic investment decisions in response to the ever-evolving economic landscape.
Jefferies has highlighted Bitcoin’s role as a hedge against inflation, drawing attention to the fact that investors have largely dismissed concerns about a U.S. recession. Despite this, ongoing economic indicators persistently signal an impending economic downturn.
Bitcoin’s narrative as a safeguard against financial system instability gained further momentum earlier this year following a crisis in the U.S. banking sector. Notably, institutions such as Signature Bank (OTC:SBNY), Silicon Valley Bank, and First Republic Bank (OTC:FRCB) faced significant challenges as customers, lacking confidence in their stability, hurriedly withdrew their funds in a state of panic.
Grayscale Ruling Sparks Optimism for Bitcoin ETFs
While the Securities and Exchange Commission (SEC) has yet to approve a spot Bitcoin Exchange Traded Fund (ETF), which would allow investors to engage with Bitcoin without directly owning the cryptocurrency, a recent court ruling in favor of Grayscale Investments, the manager of the world’s largest crypto fund, has set the stage for potential Bitcoin ETFs.
This ruling compels the SEC to scrutinize Grayscale’s application, although the agency retains the option to challenge the court’s decision. A spot Bitcoin ETF, if approved, would be traded on traditional stock exchanges, with Bitcoin custody managed by a brokerage.
Historically, the SEC has consistently rejected spot Bitcoin ETF applications, citing concerns about inadequate investor protection against market manipulation. Nevertheless, cryptocurrency enthusiasts are hopeful that approving such an ETF could open the door to broader institutional adoption, simplifying asset accessibility and enabling investors to buy and sell digital currency through brokerage accounts more easily.
Market Vector Indexes CEO Steven Schoenfeld has expressed optimism about the possibility of the SEC approving multiple Bitcoin ETF applications concurrently, suggesting that these approvals might come sooner than expected. In a related development, the House Financial Services Committee members penned a letter to SEC Chair Gary Gensler on September 26, urging the SEC to move forward with ETF approvals, with plans to address the matter in an upcoming hearing.
Cathie Wood, the CEO of influential innovation investor ARK Invest, has also conveyed newfound optimism about the potential approval of a Bitcoin spot ETF in the U.S., indicating that the likelihood of such a decision is increasing. This optimism aligns with the ongoing efforts of various entities, including established firms like Fidelity and BlackRock (NYSE:BLK), to launch a Bitcoin ETF in the United States, reflecting a growing interest in providing investors with simplified access to cryptocurrency markets.
