Consultancy CEO: Bitcoin Will Become a Common Asset in Hedge Fund Portfolios

Michael LaVere
  • Don Steinbrugge says that many hedge funds will incorporate bitcoin.
  • Recommends a diverse portfolio in lieu of falling interest rates and a looming global recession. 

Don Steinbrugge appeared on CNBC and made the prediction that hedge funds will turn to bitcoin in droves as the technology becomes more undeniable. 

Hedge Funds Like Bitcoin

Steinbrugge, who is the CEO of consultancy firm Agecroft Partners, spoke to the CNBC crew on Aug 6 and shared his belief that bitcoin will become apart of many hedge funds’ portfolios. 

He said that the cryptocurrency has been on an “amazing run,” and that bitcoin constituted “fantastic technology.”

He continued, 

“Some people are using it as a way to hedge against inflation. Right now I think it’s fairly expensive, it’s very hard to value, but bitcoin is going to be here for a long time and I think long term it will be apart of a lot of hedge funds’ portfolios.”

Steinbrugge’s comments were in response to a discussion over the escalating trade war between the US and China, which has analysts speculating over the global economic fallout.

Some have pointed to the recent price increase for bitcoin, which broke above $12,000 on Aug 6, as a direct response to this economic uncertainty--a point that gold bug Peter Schiff vehemently refuted on Twitter. 

Cryptocompare bitcoin price $12,000Bitcoin's price rose above $12,000 over the last week | Source: CryptoCompare

Currency Wars

When asked by the show’s host what he thought about a possible global currency war brewing, Steinbrugge said he was less concerned by that than the falling interest rates. 

“[Currency wars] concern me, but a lot concerns me. What concerns me even more than that is how low interest rates are in Europe and the fact that monetary stimulus is nowhere near as effective as it used to be. If we end up in a recession, there’s not a lot of dry powder to get us out of a recession. You could see a much larger selloff with a longer duration than it should be.

The CEO also gave his opinion of how investors should be structuring their portfolio in anticipation of a global recession, which includes considering the diversification of alternative assets like crypto, 

“I do think it makes sense to try and invest in stuff that diversifies your portfolio and that is not correlated to the stock and bond market. In the back of your mind, you have to be worried about a large selloff in the market at some point. This is not the time to lever up your portfolio in equities.”

A recent Delphi Digital report said that global economic factors are creating the “perfect storm” for bitcoin, which could lead to a massive increase in demand for non-sovereign assets such as crypto.