Are Governments looking to buy Bitcoin?

03/28/2021

As per the narrated version of Robert Gutmann, CEO of New York Digital Investment Group, their firm has been in negotiations with sovereign wealth funds about potential Bitcoin investments. Gutmann disclosed this exciting development while being interviewed at a virtual podcast with investment strategist and founder of Real Vision, Raoul Pal.

Pal also expanded on the aforementioned revelation by Gutmann’s, stating that Singapore’s sovereign wealth fund Temasek was indeed a Bitcoin investor. According to Pal, Temasek which holds about $306 billion in assets under management, has been buying virgin Bitcoin from miners. In his Tweet on Thursday, Pal described the imminent entry of sovereign wealth funds into the Bitcoin space as a “wall of money.”

twitter screenshot

There was speculation even before this event, since publicly-listed firms like MicroStrategy and Tesla began holding BTC on their balance sheets, about whether governments would go down this same path. Drawing parallels between the appeal of Bitcoin for public firms and sovereign wealth funds, Gutmann stressed on the intention of institutional investors to hedge their dollar-denominated liabilities. According to Gutmann, investors are re-evaluating their portfolios, adding:

“If you look at the world today on a forward basis, it is reasonable to be asking yourself as an investment committee or as an allocation committee [if] having all of [their] assets denominated in dollars against dollar-denominated liabilities is the right allocation mix.”

Back in August 2020, when disclosing its very first Bitcoin purchase, MicroStrategy CEO Michael Saylor touched on the long-term value of BTC vis-à-vis the depreciating value of cash over time. Earlier in March, Russ Koesterich, portfolio manager at BlackRock’s Global Allocation Fund characterized gold’s status as an inflation hedge as being exaggerated.

Bitcoin is currently down 8% over the last 24 hours in what is likely an upside price dislocation given the significant decline in the volume of Bitcoin held on exchanges. Despite the current drop, BTC is still up about 78% year-to-date.

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