Jefferies Warns of Currency Inflation, Cites Bitcoin as Safeguard


Global investment bank Jefferies has advised long-term investors, particularly pension funds, to allocate 10% of their portfolios to Bitcoin, denominated in U.S. dollars, as a safeguard against currency devaluation and rising inflation. As of press time, the price of Bitcoin hovers at around the $27,961 region.

Christopher Wood, Jefferies’ Global Head of Equity Strategy, believes that G7 central banks, including the Federal Reserve, will have difficulty transitioning away from unconventional monetary policies, and the substantial increase in the money supply since 2020 has extended this difficulty further. As such, the bank emphasises the importance of considering investments in Bitcoin and gold as insurance measures rather than short-term trades.

Jefferies also highlights Bitcoin’s role as an inflation hedge, noting that investors have largely overlooked fears of a U.S. recession, despite continuous economic indicators that point to an imminent downturn. This narrative was further reinforced earlier this year following the U.S. banking crisis, where several institutions, including Signature Bank, Silicon Valley Bank, and First Republic Bank, faced significant challenges due to customers withdrawing their funds in a state of panic.

The Securities and Exchange Commission (SEC) is yet to greenlight a spot Bitcoin Exchange Traded Fund (ETF). However, a recent court ruling in favor of Grayscale Investments, managing the world’s largest crypto fund, has set the stage for potential Bitcoin ETFs, mandating the SEC to scrutinize Grayscale’s application. An ETF, if approved, would be traded on conventional stock exchanges, with Bitcoin custody managed by a brokerage.

The SEC has consistently rejected spot Bitcoin ETF applications, citing concerns that applicants haven’t demonstrated adequate investor protection against market manipulation. Nevertheless, the House Financial Services Committee, along with influential innovation investor ARK Invest CEO Cathie Wood, have expressed optimism about the potential approval of a Bitcoin spot ETF in the U.S. Market Vector Indexes CEO Steven Schoenfeld also believes that the approval of multiple Bitcoin ETF applications is imminent.

Simplifying asset accessibility through a spot Bitcoin ETF would enable investors to buy and sell digital currency through brokerage accounts more easily, paving the way for broader institutional adoption.

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