Anthony Pompliano, widely viewed as one of the investors with the most positive outlook on Bitcoin, is advocating for fund managers and investors to have exposure to Bitcoin.
The co-founder of Morgan Creek Digital Assets stated in his latest “Off the Chain” podcast that having a 1 to 5 percent capital allocation to Bitcoin is a sensible decision for every investor. According to him cryptocurrency is the best hedge currently available against the looming global economic crisis. Especially institutional investors should be paying attention, as the uncertainty around global markets could be hinting at a worldwide asset drawdown.
“We are living in exceptionally volatile and unpredictable times. Institutional investors have sought out non-correlated assets as portfolio diversification tools for decades,” wrote Pompliano.
With its year-to-date performance, Bitcoin is one of the top performing assets, while traditional markets continue to stagnate.
“Now that Bitcoin is presenting itself as the perfect global hedge, it will quickly become irresponsible for these investors to remain with 0% exposure to the digital currency.”
The Global Stalemate
The recent geopolitical situation is starting to heat up, and is directly affecting stock markets, with investors wary of potential political intervention from nation states. United States and China have been in a constant tariff war over the last couple of months. While the U.S. is prepared to impose additional 10 percent tariffs on $300 billion worth of Chinese imports, China intends to cease buying agricultural products from the U.S.
Further, the Chinese Yuan fell below $7 for the first time in eleven years, prompting U.S. officials to accuse Beijing of actively manipulating their currency. The ongoing conflict has sent U.S. and Asian equities into a price freefall.
Bitcoin, the only non-sovereign asset, is performing well and could be perceived by investors as a safe haven. Capital is starting to flow into it for various reasons, including fighting capital control in China, to protect their investment portfolios.
“Bitcoin, is a non-correlated, asymmetric return-profile asset. It has proven even to be inversely correlated in times of increased global instability. Take May 2019, for example — the trade wars were escalating, and threats of tariffs were being lobbed at multiple countries. Bitcoin was up 55% for the month and showed a negative correlation to the S&P 500 and gold.” wrote Pompliano.
The Case Against Bitcoin
Even with its impressive current performance, there are also skeptical opinions about Bitcoin. Peter Schiff, an ardent proponent of gold as the standard for storing value, believes that cryptocurrency prices are driven solely by speculation.
“Why does CNBC allow Brian Kelley to lie about Bitcoin,” he tweeted about a Squawk Box coverage about the cryptocurrency’s rise. “He just assured viewers that a new high in Bitcoin is a certainty because for the first time an institutional herd is now buying. Brian, I challenge you to identify those institutional investors that have piled in!”