CryptoCorner
Global hedge fund managers expect to invest an average of 7.2% of their assets in Bitcoin and other cryptocurrencies by 2026, according to a survey.
That could mean hedge funds will invest up to $ 312 billion over the next five years, or about 41.5% of Bitcoin’s current market cap.
Intertrust, a listed international trust and corporate management company based in the Netherlands, surveyed 100 hedge fund managers worldwide and found that some companies plan to invest up to 10% or more of their portfolios in cryptocurrencies.
Hedge funds are typically aimed at high net worth investors and invest pooled funds using a variety of strategies, including long and short positions in a range of assets, in order to achieve returns in different market conditions.
The results of Intertrust’s survey were first published by the Financial Times, a British newspaper.
A survey found that global hedge fund managers expect to invest an average of 7.2% of their assets in Bitcoin and other cryptocurrencies by 2026. This photo shows a Bitcoin ATM in the Big Apple Tobacco Shop on February 8, 2021 in New York City.
Michael M. Santiago / Getty Images
Bitcoin is the world’s largest cryptocurrency by market capitalization, so it gets most of the coverage.
But hedge funds are also likely to invest in Ethereum, the second largest cryptocurrency by market capitalization and key to developing decentralized finance – blockchain-based transactions between individuals who don’t rely on financial intermediaries like banks, brokers, or stock exchanges.
In a research report, the St. Louis Federal Reserve Bank said Ethereum was better for trading than Bitcoin.
Top money managers’ interest in cryptos underscores Bitcoin’s growth as an asset class. Many institutional investors are using it as an inflation hedge fearing that massive global government spending in response to the COVID-19 pandemic will lead to inflation.
The planned investments are also a vote of confidence in Bitcoin. Critics say Bitcoin is too volatile to be used as a store of value or to trade.
The cryptocurrency rose from about $ 29,000 in late 2020 to over $ 63,000 in April. It lost up to half its value in the recent downturn, but has rebounded and is now trading at around $ 40,000.
The number of Bitcoins worldwide is limited to 21 million and there are now around 18.73 million coins in circulation. As long as demand stays strong, Bitcoin’s price should theoretically rise over time, especially as millions of new dollars chase a limited number of coins.
Increased investments by large institutions and top corporations could offset Bitcoin’s manic price fluctuations. Some analysts believe that large institutional investors will continue to hold Bitcoin despite daily price fluctuations, including a sharp dip.
Many retail investors, especially those who held Bitcoin for six months or less, sold during its recent downturn, an analysis of blockchain activity revealed. What looked like panic selling fueled bitcoin’s volatility.
A small number of new coins are added to the market on a regular basis.
Tim Draper, a multi-billion dollar venture capitalist and Bitcoin investor, believes Bitcoin will hit $ 250,000 by 2022 or early 2023.
“I think I’ll be right here,” Draper told CNBC.
He first predicted Bitcoin’s surge in 2018 when it grossed around $ 8,000.
Draper made his living investing in Twitter, Skype, Tesla, SpaceX, and other top companies.
But many believe that Bitcoin has no real value and its price will eventually collapse.
A survey of fund managers conducted by Bank of America in April found that 74% of respondents thought Bitcoin was a bubble. Still, around 10% of respondents said they believe Bitcoin would outperform the overall market in 2021.
In a research note released in March, Bank of America analysts said there was “no good reason to own Bitcoin unless you see prices go up”.
The volatility of crypto makes it unsuitable as a store of value or a means of payment, according to the bank’s analysts.
In midday trading on Tuesday, Bitcoin changed hands at $ 40,127.65, down 0.39% in the last 24 hours but up 37.80% for the year. The 24-hour range is between $ 39,365.23 and $ 40,859.69. The all-time high is $ 64,829.14. The current market capitalization is $ 751.79 billion, reported CoinDesk.
Market pulse
Owners hold onto their vehicles longer, bringing the average age of cars on US highways to a record 12.1 years, IHS Markit reported.
The average age of cars on the streets has risen over the past 15 years with increasing quality.
The trend accelerated during the COVID-19 pandemic when new car sales fell and many owners kept their current vehicles longer than planned during the lockdown, the London-based market intelligence firm said.
However, the trend is expected to weaken and possibly reverse this year as the economy reopens amid rising vaccination rates and rising new car sales.
“The pandemic-induced rise in the median age is expected to be short-lived as new vehicle registrations return in 2021 … as we adjust to post-pandemic norms,” said IHS Markit.
New car sales declined at the start of the pandemic as buyers stayed home and dealers struggled to follow social distancing guidelines. But sales picked up in the second half of 2020, increasing new registrations by about 5% for the year, suggesting that demand for new cars remains strong.
Buyers seem eager to spend this year, but kinks in the supply chain can hurt sales.
The ongoing microchip shortage is expected to limit new car production until the end of 2021. Chips are used in a number of applications including anti-lock brakes, entertainment, dashboard displays, and to increase engine performance.
Nevertheless, IHS expects sales of 16.8 million light vehicles in the US this year, compared to around 14.6 million in 2020. Around 17 million new vehicles were sold in 2019.
The Federal Reserve, the country’s central bank, kept interest rates low to support the economy during the lockdown and recovery. Personal savings have increased during the lockdown and many are eager to spend on large items, including new cars.
JD Power said the average cost of a new vehicle was $ 38,255 in May, a record high.
Sales of electric vehicles continue to grow. There are now about 1 million electric vehicles in the U.S. and the average age is 3.9 years.
According to IHS, 89% of electric vehicles sold between 2016 and 2020 are still first-owner registered, compared to 68% of gasoline-powered cars for those model years.
Most Tesla models cost between $ 41,190 and $ 91,190. The roadster starts at $ 200,000 and goes up to $ 250,000 for the fancier version.
A full size pickup truck starts at $ 48,000. Tesla stock shapes that are designed for commercial use cost between $ 150,000 and $ 200,000.
The number of scrapped cars rose to around 15 million and the number of kilometers driven decreased by 13% in 2020 compared to the previous year.
Typically, taking cars out of service reduces the average age of cars still on the road, as older vehicles are typically retired first. But the slow sales of new cars during the pandemic created a statistical quirk and increased the average age of cars on the streets.
Reducing the number of kilometers driven allowed many owners to extend the life of older cars.
Additionally, an increase in the number of unregistered vehicles during the pandemic due to eased renewals in some states and owners who are storing cars during the COVID-19 pandemic can inflate the average age of cars.
Current market conditions have increased the value of used cars, and that’s good news for independent repairers who do a good chunk of the work for vehicles without warranty.
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