Are there Risks in Not Allocating Bitcoin?

It is now risky for many institutions to not allocate bitcoin, states CoinShares CSO Meltem Demirors.

The chief strategy officer of CoinShares, Meltem Demirors warns that it is now uncertain for institutional investors to not have Bitcoin in their portfolio.

In an interview, the executive of the digital asset management firm addresses concerns that the bullishness around Bitcoin (BTC) had a time limit, and eventually, regulators like US Treasury Secretary Janet Yellen will crackdown on the crypto industry.

“I think Janet Yellen’s comments were fairly nuanced, there’s an alphabet soup of three-letter agencies that already regulate the Bitcoin industry. I think there’s this misconception that Bitcoin is unregulated which is certainly false. We spend a lot of time on compliance in our organization, but look, what I think is happening is in 2020, it was a risk for investors to allocate to Bitcoin. In 2021 it is a risk to not allocate to Bitcoin.”

“And it’s not just investors, it’s corporations. MicroStrategy is soaring on the back of its allocation to Bitcoin. It has more than doubled its treasury reserves due to its allocation. They just hosted an event with over a thousand corporate treasurers in attendance and also I think we now have nation-states starting to seriously look at what role Bitcoin could potentially play in the future of their economies.”

Demirors continued that this time around, the institutional interest is leading the Bitcoin bull run charge while retail traders are even more focused on smaller crypto assets and meme coins.

“A lot of the interest in Bitcoin is coming from institutions. When we look at trends on the trading side, from the structured product side where we operate and manage $4 billion in assets for our clients, a lot of the inflows are coming from institutions that are allocating through publicly listed exchange-traded products or funds. There is retail participation, but it’s nowhere near what we saw in 2017.”

“Where we are seeing the retail participation is in things like Dogecoin (DOGE) and other sorts of smaller market cap cryptocurrencies that lend themselves more to ‘memefication’ and what we call ‘meme coins’ or ‘meme stocks,’ if you look at GameStop and AMC. Really what’s driving Bitcoin in my view is the fundamental shift in sentiment. Ray Dalio is talking about it, BlackRock is allocating to it, Guggenheim is allocating. All of the major allocators are now getting in.”

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