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Jefferies, a prominent global investment bank, has declared that Bitcoin (BTC) serves as a safeguard against currency devaluation and increasing inflation. The current price of Bitcoin hovers around the $27,961 mark.
The bank is offering advice to long-term investors, particularly pension funds, suggesting that they allocate 10% of their portfolios to Bitcoin, with the investments denominated in U.S. dollars. They emphasize that Bitcoin and gold should be viewed as insurance measures rather than short-term trades.
One key point made by Jefferies is that efforts to tighten monetary conditions will face prolonged delays in this economic cycle due to the substantial increase in the money supply since 2020. Christopher Wood, Jefferies’ Global Head of Equity Strategy, expresses concerns about the ability of G7 central banks, including the Federal Reserve, to transition away from unconventional monetary policies smoothly. He suggests that these central banks will likely continue to expand their balance sheets in various ways.
Jefferies highlights Bitcoin’s role as an inflation hedge and points out that investors have largely ignored fears of a U.S. recession. However, economic indicators persistently indicate the likelihood of an imminent economic downturn.
The narrative of Bitcoin as a safeguard against financial system instability gained traction earlier this year following the U.S. banking crisis. Institutions like Signature Bank, Silicon Valley Bank, and First Republic Bank experienced significant challenges as customers withdrew their funds due to concerns about their stability.
Regarding Bitcoin Exchange Traded Funds (ETFs), the SEC has yet to approve a spot Bitcoin ETF, which would enable investors to engage with Bitcoin without owning the cryptocurrency itself. However, a recent court ruling in favor of Grayscale Investments, the manager of the world’s largest crypto fund, has raised hopes for potential Bitcoin ETFs. This ruling compels the SEC to examine Grayscale’s application, although the SEC still has the option to challenge the decision.
If approved, a spot Bitcoin ETF would be traded on traditional stock exchanges, with Bitcoin custody managed by a brokerage. The SEC has previously rejected spot Bitcoin ETF applications due to concerns about investor protection against market manipulation.
Despite these challenges, there is growing optimism about the approval of a Bitcoin spot ETF in the U.S., with influential figures like Cathie Wood expressing hope for such a decision. This trend reflects increasing interest in providing investors with easier access to cryptocurrency.
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