In a previous post, I spoke about how British investment firm Ruffer Investments invested 2.5% of its portfolio into bitcoin. At the time, this was estimated to be worth around $745 million. A big move into crypto, to be sure.
One of the general trends I've been following is the wall of money moving into bitcoin. Since I'm taking notes whenever there's a large, institutional investment into the cryptocurrency space, it's only fair to also mention when some of those investment dollars leave. On 3 February 2021, Coindesk reported that Ruffer has sold off part of this investment.
Ruffer made it's investment back in November 2020, and BTC's parabolic price movement since then surely has something to do with their decision to sell. Assuming Ruffer bought in around $15,000-$16,000/BTC, it's not too surprising they took some off the table. They confirmed they sold in December and January, meaning they likely cashed out above $30K, if not above $40K. Not too shabby of a trade over 60-ish days.
However, a little profit taking is not an abandonment of their investment into BTC. Ruffer notes they didn't sell everything and still have $700 million in bitcoin. They basically took their initial investment off the table along with over $600 million in profit but still have roughly close to what their investment was into BTC, in dollar terms. They are still in the market and playing with house money now.
Referencing back to when they made the investment, Ruffer stated the following about why they were moving into crypto:
- mainstream adoption by financial institutions of Bitcoin could be coming soon
- From their memo: "the coming together of a fragile monetary system, distorted financial markets and investors' hunger for safety could trigger a surge in demand for bitcoin as a store of value"
- They state their bitcoin buy is an "evolutionary rather than a revolutionary move for Ruffer"
- The bitcoin portfolio position is a "small but potent insurance policy" with low correlation to other assets in their portfolio
- Adding BTC is a defensive move
- Ruffer says the the 12 year history of bitcoin has proven its resiliency through multiple market cycles
- "The current macroeconomic environment is set up perfectly for an asset that blends the benefits of technology and gold"
It would seem to me that all of their points for making the initial investment still hold true, if not more true. Considering they still have close to their original investment in the market, the sale strikes me as portfolio rebalancing. Their investment in bitcoin went up so quickly that it became too large a share of their portfolio, and they had to sell some. In my view, this actually makes the price action in January and into February seem more positive: over $1 billion in bitcoin was sold by an institutional holder when bitcoin was at market highs and bitcoin still hit new highs during the period this sale took place in.
I suspect they will be long term holders of what they still have in their portfolio. If every satoshi they still hold represents profit, why pay taxes to cash it out if you believe in the long term potential investment value of bitcoin (based on the bullet points above)?
But maybe I'm falling prey to my own biases, interpreting what should be negative to neutral news as a positive. I try not to make predictions about anything, especially the future, but it will be interesting to see what happens to bitcoin as more and more large institutions start grabbing their stake in it.
