On Wednesday (December 16), Scott Minerd, Global Chief Investment Officer of Guggenheim Partners, “a global investment and advisory firm with more than $295 billion in assets under management,” gave his long-term price target for Bitcoin.
Minerd is a founding Managing Partner at Guggenheim, where has worked for the past 22 years. Before Guggheim, he was “a Managing Director with Credit Suisse First Boston in charge of trading and risk management for the Fixed Income Credit Trading Group.”
Guggenheim Investments is “the global asset management and investment advisory division of Guggenheim Partners and has more than $233 billion in total assets across fixed income, equity and alternative strategies.” It focuses on “the return and risk needs of insurance companies, corporate and public pension funds, sovereign wealth funds, endowments and foundations, wealth managers and high net worth investors.”
On November 27, according to a U.S. SEC post-effective amendment filing, it became known that one of Guggenheim Investments’ fixed income mutual funds (“Macro Opportunities”) was considering investing in Bitcoin.
According to an overview of the Guggenheim Macro Opportunities Fund (ticker: GIOIX), it “seeks to provide total return, comprised of current income and capital appreciation.” The fund “has the flexibility to invest across a broad array of fixed income securities,” and its investment strategy “may opportunistically allocate to other asset classes to potentially enhance return and/or mitigate risk.”
According to data by the Financial Times, this fund was launched on 30 November 2011, and its total net assets was $4.97 billion (as of 31 October 2020).
The SEC filing made on November 27 is known as an “SEC POS AM” (aka “post-effective amendment”) filing. This type of filing “allows a company registered with the SEC to update or amend its prospectus.”
This filing stated that the fund is considering getting some cryptocurrency exposure:
“Cryptocurrencies (also referred to as ‘virtual currencies’ and ‘digital currencies’) are digital assets designed to act as a medium of exchange. The Guggenheim Macro Opportunities Fund may seek investment exposure to bitcoin indirectly through investing up to 10% of its net asset value in Grayscale Bitcoin Trust (“GBTC”), a privately offered investment vehicle that invests in bitcoin.”
Well, yesterday (December 16), after the Bitcoin price had finally broken through the $20,000 level on all crypto exchanges to set a new all-time high, the Guggenheim talked about Bitcoin during an interview on Bloomberg TV.
The interview started by the Guggenheim CIO being asked by Scartlet Fu, Bloomberg TV’s Senior Editor of the Markets Desk, about the Guggenheim Macro Opportunities Fund and the decision by its managers to invest “up to 10% of its net asset value in Grayscale Bitcoin Trust.” In particular, he was asked if Guggenheim had started buying Bitcoin yet and how much this decision was “tied to the Fed’s extraordinary policy.”
“To answer the second question, Scarlett, clearly Bitcoin and our interest in Bitcoin is tied to Fed policy and the rampant money printing that’s going on. In terms of our mutual fund, you know, we are not yet effective with the SEC. So, you know, we’re still waiting.
“Of course, we made the decision to start allocating toward Bitcoin when Bitcoin was at $10,000. It’s a little more challenging with the current price closer to $20,000. Amazing, you know, over a very short period of time, how big run-up we’ve had, but having said that, our fundamental work shows that Bitcoin should be worth about $400,000. So even if we had the ability to do so today, we’re going to monitor the market and see how trading goes, what evaluation that ultimately we have to buy it.”
Minerd was then asked how why he believes the Bitcoin price could reach $400,000.
“Right, Tom, it’s based on the scarcity and relative valuations such as things like gold as a percentage of GDP. So you know, Bitcoin has actually has a lot of the attributes of gold and at the same time has an unusual value in terms of transaction.”