According to a Nov. 27 SEC filing, Guggenheim Partners, a global investment and advisory firm with over $270 billion worth of assets under management, is seeking to gain indirect exposure to Bitcoin. The company laid out its plan to invest 10 percent of the net asset value of its Macro Opportunities Fund into the shares of Grayscale Bitcoin Trust (“GBTC”), which translates into close to $500 million.
Bitcoin is currently trading at $18,109 on the Bitstamp exchange as its relief rally is picking up pace following a plunge to the $16,200 level on Nov. 26.
Bitcoin exposure comes with risks
In its filing, Guggenheim Partners warns that its enormous Bitcoin bet could incur “substantial losses” due to numerous risks associated with the nascent asset class that include regulatory woes, a crisis of confidence in its network, or the rise of altcoins.
Historically, GBTC shares have always traded a premium to net asset value (NAV) whose spikes tend to coincide with bullish market reversals. Guggenheim Partners investment warns that its investment would be adversely impacted if that premium were to dissipate, a scenario that gold bug Peter Schiff predicted back in July.
Furthermore, the firm will be affected by Grayscale’s operating expenses.
Institutions are gobbling up Bitcoin
In spite of all the aforementioned risks, not having exposure to the cryptocurrency appears to be even more risker against the backdrop of the global inflationary environment.
Yet another major institution making a major Bitcoin bet is a significant vote of confidence in the world’s largest cryptocurrency.
842.364 Bitcoins (roughly $15 bln at press time) are currently held in corporate treasuries.
Last week, the Grayscale Bitcoin Trust reached a major milestone by surpassing over $10 bln worth of BTC under management.