‘No more can be ignored’ bitcoin, warns Morgan Creek’s Mark Yusko

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There may come a time when ignoring bitcoin will be seen as irresponsible. “We truly believe that we will look back five years from now, and it will be considered fiduciary reckless to have zero exposure to digital assets,” said Mark Yusko, founder, chief executive officer and chief investment officer of Morgan Creek Capital Management. MarketWatch in a telephone interview Wednesday afternoon. Some institutional investors are “dabbling” into crypto, while many others have “evaluated” it, a “euphemism for doing nothing,” Yusko said.

Speaking Wednesday at MarketWatch’s “Investing in Crypto” virtual event series, Hester Peirce of the Securities and Exchange Commission said the United States is “behind the curve” in building a regulatory framework for cryptocurrencies. SEC Commissioner Peirce said she did not know if the regulator would approve a bitcoin exchange-traded fund this year, in part because he is in transition as Gary Gensler heads toward likely confirmation as the next SEC chairman. “Our take on the ETF is that it is going to happen,” Yusko said by phone. “We have invested in one of the asset management groups that has a registered application.” Morgan Creek, an alternative asset manager based in Chapel Hill, North Carolina, has invested in Bitwise Asset Management, according to Yusko. He said that Bitwise was one of the first applicants for the bitcoin ETF. The San Francisco-based firm announced in January 2019 that it filed the proposed Bitwise Bitcoin ETF with the SEC. Bitwise is among several asset managers, including Fidelity and Grayscale Investments, who have applied for an exchange-traded fund focused on cryptocurrency. Read: ‘We have reached a tipping point’ in bitcoin adoption, says Fidelity’s Tom Jessop With bitcoin BTCUSD, + 3.22% of market valued around $ 1 trillion, or about half of the total $ 2 trillion cryptocurrency , “It can’t be ignored anymore,” Yusko said. “I really think we are at a turning point.” While many investors continue to evaluate bitcoin with reservations about its place in portfolios, Yusko said he has seen growing interest among institutional investors amid the disruption it is creating. The performance of cryptocurrencies has been “so strong” that even a small allocation in portfolios can make a big difference, a point Yusko said he sees resonate between foundations and university endowments. “They are so competitive with each other that I think that will lead to additional adoption,” he said. Investing in cryptocurrencies may be at a tipping point, but top asset managers aren’t exactly rushing towards bitcoin in full force. Invesco’s chief global market strategist Kristina Hooper and Michael Arone, chief investment strategist for State Street Global Advisors’ US SPDR business, told MarketWatch in phone interviews this week that they see Bitcoin as an asset. speculative. “I’m from the field that thinks it’s a very speculative investment,” Hooper said in a telephone interview Wednesday. The volatility in Bitcoin’s performance makes it a “much riskier” investment than stocks. Bitcoin BTCUSD, + 3.22% was trading around $ 57,715 on Thursday afternoon, an increase of 2.78 percent. That’s down from its record of around $ 61,000 in March. Read: Ether, the No. 2, hit a record above $ 2,100 as bitcoin is trading near $ 60,000 on Good Friday. Meanwhile, US stocks rose Thursday afternoon, as measured by the S&P 500 Index. The S&P 500 SPX, + 0.39% was trading 0.3% higher, with gains for the year around 9%, according to data. of FactSet. Arone of State Street said that most investors hold bitcoins in the hope that their price will experience a significant jump, while the main motivation for owning an asset like GCM21 gold, + 0.84% ​​is to hedge against risks like inflation or political concerns. “You want your store of value to be somewhat stable,” he said in a telephone interview. Well, bitcoin is not stable. It is quite volatile, ”he said, adding that it is much more volatile than stocks, currencies and gold. Arone also said that bitcoin has no real use beyond speculation at this point, but that State Street has been answering many questions from customers. Morgan Creek’s Yusko sees promise in the future of cryptocurrencies. “In a world where technology is moving us toward a borderless society, you don’t want to fight technology,” Yusko said. “You want to be the first to hug him.” Within cryptocurrencies, Morgan Creek’s hedge fund investments are primarily in the capital of companies that provide infrastructure to the industry. About 20 percent can go to “liquid protocols,” including cryptocurrencies, according to Yusko. Morgan Creek’s CIO said his firm invests in Coinbase Global, the cryptocurrency exchange that is reportedly preparing to go public next week. Coinbase’s direct listing is scheduled for April 14, according to a Wall Street Journal report. “We are very excited about the direct listing of Coinbase,” Yusko said, adding that Morgan Creek has built a portfolio of innovative companies in the crypto industry while putting capital to work in bitcoin. “We see bitcoin essentially as a late-stage venture investment,” he said. “Instead of buying shares, you actually buy the protocol itself to own the network.”