Investors fear that fiscal stimulus measures used by the monetary authorities to support economy amid the pandemic could bring to skyrocketing inflation.
The American Bitwise raised almost $ 8.9 million for its bitcoin fund. The digital asset management company notified the SEC about this.
Bitwise Bitcoin Fund allows accredited investors to invest in cryptocurrency using traditional mechanisms. Over the past year, the volume of assets under the management of this fund has almost doubled: in accordance with the FormD application completed in December 2019, the fund attracted $ 4.1 million in investments last year.
Bitwise’s head of research, Matthew Hougan, told Coindesk that the fund’s doubling is not due to the adoption of Bitcoin by mainstream investors, but to their fears about accelerating inflation.
“With the unprecedented expansion of the Fed’s balance sheet, the radical amounts of fiscal stimulus, and the Fed’s new and significantly more dovish inflation policy, [Bitwise clients] are looking for a hedge”
Bitwise’s head of research, Matthew Hougan
Fiscal incentives are used by governments and central banks of different countries to support economic activity in the context of COVID-19. The monetary authorities are cutting interest rates and printing more currency. For example, in March, the Fed announced the launch of unlimited quantitative easing (QE) – a series of programs that provide for the central bank to buy out a certain type of assets in the secondary market.
Many of Bitwise’s clients are former financial advisors who previously served high-net-worth investors, Hougan said, so they fear the impact of inflation on their portfolios. These investors see Bitcoin, which is limited to $ 21 million, as a safe haven for their assets in case the authorities’ monetary policy leads to rapid inflation.
As a reminder, Bitwise has been trying to get SEC approval to launch a bitcoin ETF for a long time. Last year, the regulator rejected the company’s application, saying that the papers it received did not meet legal requirements. And though later the SEC decided to re-consider the application, Bitwise withdrew the documents.