Cryptocurrency does not feature in our strategic portfolio, partly because we are not yet convinced crypto is a fundamental asset. There is an obvious appeal to a currency that lies outside government control, yet bitcoin and ether have significant disadvantages for transactions compared with existing payment networks. The need for a stable store of value is obvious given the growing long-term risks of currencies being debased, and gold still seems a superior choice in almost every way. All this makes it difficult to decide whether cryptocurrency is truly a revolution that will find more mainstream applications or the ultimate expression of our bubble-prone era.
Still, we cannot ignore how bitcoin has surged over the past decade, much of which occurred against a backdrop of ultra-low interest rates that created bubbles. More recently, the pro-crypto stance of the Trump administration gave it a further speculative boost. To the extent that the US government has a coherent policy, it is to encourage stablecoins—digital currencies backed by assets such as government bonds—in an attempt to entrench the dominance of the dollar and provide a steady source of demand for the vast amount of US Treasuries it is issuing. This is very different to supporting bitcoin and ether.
Investors in the UK were restricted from regulated crypto ETFs until late last year, which pushed many toward unregulated exchanges with less protection. Regulators have since allowed access to products such as CoinShares Physical Bitcoin and WisdomTree Physical Bitcoin, and the London listing of 21Shares Bitcoin Gold (BOLD) reflects broader access. BOLD holds a mix of gold and bitcoin in a monthly rebalanced ratio, aiming to combine their distinct risk profiles. Since its listing in Switzerland in April 2022, BOLD has delivered around 108% returns with far lower volatility than bitcoin.
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