Selling gold for Bitcoin (BTC) appears to be the new strategy among some investors. Jefferies’ Christopher Wood is no exception. He is now trimming his allocation to the precious metal to expand his exposure to the world’s largest cryptocurrency.
Wood, who happens to be the global head of the investment banking firm, also believes traditional financial establishments such as banks should focus on blockchain and leverage the technology instead of waiting for it to cause a major disruption.
This isn’t the first time that Wood has added Bitcoin position at the cost of gold exposure. In December 2020, he slashed his yellow metal position in his long-only asset allocation for USD-based pension funds to 45% from 50%.
Change of heart
Interestingly, Jefferies’ global head of equity wasn’t always a fan of Bitcoin. He had previously stayed away from investing in the cryptocurrency, citing hacking concerns. Like most institutional players, Wood, too, had a change of heart. While he still remains bullish on the yellow metal, he also believes it may not be wise to ignore the revolution brought about by Bitcoin and other cryptocurrencies.
In a note to his investors, as reported by Economic Times, the prominent strategist stated that if blockchain technology manages to disrupt the conventional finance space by wiping out the need of third parties and intermediaries, it could also lead to the demise of the “dollar paper standard.”
While drawing parallels with BTC and gold, Wood admitted that the latter’s performance had been hugely disappointing, especially with negative rates in the US. In that regard, he believes the debut of the much-anticipated Bitcoin Futures ETF in the country signals the need to make further adjustments to the global portfolio for US-dollar denominated pensions funds established at the end of Q3 2002.
Chris Wood: Bitcoin yes, but Not Ethereum
Despite his changing stance on Bitcoin, Wood is yet to consider Ethereum in his portfolio. Reiterating his previous position on the cryptocurrency, the exec revealed that he has no plans to put ETH in a pension fund portfolio as it is not a “store of value” asset. However, he maintained that the altcoin might outperform Bitcoin in the near future.
Currently, his portfolio recommendation stands at 10% BTC exposure, 40% gold, 30% Asia (excluding Japan) equities, and 20% unhedged gold mining stocks.