Bitcoin (BTC): Wealthy Investors Jump Into Cryptocurrencies Like Stigma Fades

Photographer: Pierre Teyssot / AFP / Getty Images

Christian Armbruester wishes he could buy more.

Armbruester, founder of Blu Family Office, a London-based investment firm for affluent clients, dabbled in cryptocurrencies a few years ago. But the occasional investment banker, whose family made a fortune in metals and manufacturing, believes cryptocurrencies have earned a place in a diversified portfolio. With Bitcoin surging more than 270% since its 12-month low in March, it is recapturing its investments in space and eyeing big returns.

“We’re now looking for trading opportunities in a very exciting area,” said Armbruester, who manages about $ 670 million for Blu Family Office, including his personal wealth.

Armbruester has plenty of company. Mexican media billionaire Ricardo Salinas Pliego recently tweeted that he is invest 10% of its liquid assets in Bitcoin. Wall Street legends Stanley Druckenmiller, Paul Tudor Jones, and Bill Miller have approved its purchase. After influential currency manager Rick Rieder went on CNBC last month and said Bitcoin was “here to stay,” more than 874,000 viewers watched the clip on Twitter, attracting far more hits than its Covid-19 or monetary policy segments.

“It tells us that Bitcoin has caught the attention and imagination of many,” Larry Fink, chief executive officer of asset management giant BlackRock Inc. and the Rieder manager, during a virtual conference on December 1. “But it is still unproven and quite a small market compared to other markets. ”

The last time Bitcoin skated in 2017, many wealthy investors largely stayed on the sidelines. The ersatz currency was compared to the tulip mania during the Dutch Golden Age, and its usefulness as a money laundering device in the digital underworld was a major source of scare in mainstream finance. Warren Buffett called Bitcoin a “mirage” and Jamie Dimon called it a “fraud” (though he later expressed remorse for that comment).

Since then, Bitcoin has yet to prove that it will truly become a form of universal currency accepted worldwide. And many affluent investors like Armbruester believe alternatives like Ethereum it can ultimately be more valuable. Furthermore, cryptocurrencies are traded in a volatile market driven by rampant speculation and arcane technology rather than the easy-to-see essentials that drive stocks or bonds or commodities. And this week investors are getting a lesson in Bitcoin volatility, with the cryptocurrency skidding about 8.5% since Sunday.

Yet affluent investors are giving Bitcoin a serious second look as it gains mainstream acceptance from influential players like PayPal Holdings Inc. a Visa Inc., both of which enable account holders to use crypto. Miller is one of many traditional investors who have noted that Bitcoin’s stability and its 12-year-old technology, blockchain, are strengthening confidence in its staying power.

Meanwhile, other investors are choosing to support the new generation of Bitcoin-inspired database and financial software. “We have recently allocated Blockchain and funds and companies focused on distributed ledger technology, and will continue to allocate more,” said Bobby Console-Verma, founder of London-based technology company 1fs Wealth managing money for its investment office.

The central banks and governments then move into cash-flooded economies and reduce interest rates to nearly zero to tackle the coronavirus pandemic. This massive wave of quantitative easing and fiscal stimulus, which is showing signs of continuing next year, also buries the credibility of cryptocurrencies as an alternative asset class.

“Usually in times of crisis people run into cash but rightly want to be cash rich at a time when big economies are depreciating their money?” said Kevin Murcko, founder and CEO of CoinMetro, a cryptocurrency exchange located in Estonia. “You could say that Covid-19, the US election, Brexit, and, well, 2020 have all changed the way many in traditional finance see the value of digital assets.”