Former Portfolio Manager Believes That Every Investors Will End Up With Exposure To Cryptocurrency
- Travis Kling, formerly of Point72, believes that all investors will eventually hold cryptocurrency in their investment portfolio.
- If Bitcoin succeeds, investors that hold at least 1% Bitcoin in their $10 million portfolio could nearly triple their portfolio’s value.
Travis Kling formerly worked at Point72 as an L/S Equity Portfolio Manager, and he recently made comments about the way that cryptocurrency will ultimately impact the rest of traditional investors. Point72 presently manages $13 billion assets under its hedge fund, though King believes that investors will be taking other ventures beyond traditional finance. In fact, he believes that all investors will ultimately be exposed to crypto assets in the long run.
As the founder of the Ikigai Asset Management firm, Kling commented that, while he is certain that all investors will have some kind of crypto asset exposure in their investment portfolio, the time they take to do so will greatly impact their investments. These statements come shortly after Bitcoin has finally breached $8,000, growing by 66% in the last month.
Still, what would happen in the industry or amongst investors to cause them to take on crypto assets? This asset class is considered to be high risk right now, as far as an investment, because of the volatility of the market and other factors. However, the Kana & Katana research platform, which is run by the Ikigai team, published an essay, during which Xapo CEO Wences Casares discussed holding at least 1% of a $10 million portfolio in Bitcoin.
Casares said that, in the event that Bitcoin ends up failing, the most that an investor will lose with 1% attributed to Bitcoin will be $100,000 over the course of 3 to 5 years, that is a loss which “most portfolios can bear.” If Bitcoin sees success instead, there is a chance that this $100,000 investment will end up having a value of at least $25 million, which would be 2.5 times the original value of the investment portfolio.
The introduction of new custodial solutions in the market is likely to be driving force behind getting these institutional investors into the crypto market. Many institutions will seek out companies that have established themselves as their custodians, giving them confidence that the capital they invest will be protected in an insured and regulated environment. With the progress, the cryptocurrency has clearly made over the last five years in institutionalization with companies like Fidelity and ICE, the custodial infrastructure for crypto is so much stronger than before.
Kelly Loeffler, the CEO of Bakkt, commented on May 13th that their platform had been working on achieving approval from the Commodities and Futures Trading Commission (CFTC). Bakkt is hoping to open their bitcoin futures custody in July of this year. Loeffler added that they have been working “closely” with the authorities to ensure that the contracts offered fall completely in line with customer needs and regulations of the government.
Clearly, if the record volumes of the CME bitcoin futures market and the $1.8 billion Grayscale Bitcoin Investment Trust are any indication, institutional investors have become more interested in cryptocurrency through the last few weeks. On May 13th alone, CME showed $1 billion in daily volume, as Bitcoin rose from $7,000 to $7,800. Presently, Bitcoin is trading at $7,958.19, losing just under 1% of its value in the last 24 hours.