Asset Managers Continue to Embrace Bitcoin as Key Portfolio Diversification Tool: QCP

Recognizing the potential benefits of Bitcoin‘s role as a portfolio diversifier, asset managers have been actively increasing their Bitcoin allocations.

In a recent note, crypto asset trading firm QCP Capital revealed that asset managers continue to add Bitcoin allocations as a “portfolio diversifier.”

Additionally, requests for structured products such as Accumulators and FCNs have flooded in, revealing a strong appetite for diversifying investment portfolios with BTC, the Singapore-based crypto firm wrote. 

⁠”Anecdotally, wealth desks at major banks have been pleasantly shocked at the tremendous demand from clients for BTC spot ETFs, along with requests for structured products like Accumulators and FCNs.”

QCP: Wealth desks at major banks have been pleasantly shocked at the tremendous demand from clients for BTC spot ETFs, along with requests for structured products like Accumulators and FCNs. Asset managers also continue to add BTC allocations as a “portfolio diversifier”.…

— Wu Blockchain (@WuBlockchain) March 26, 2024

Bitcoin Sets Sight on $100,000 Mark

Bitcoin has recently surpassed $70,000 following news that the London Stock Exchange plans to introduce Exchange-Traded Notes (ETNs) for BTC and ETH in May.

However, QCP expects the leading cryptocurrency to maintain momentum, breaking all-time highs and potentially reaching the coveted $100,000 mark. 

It noted that amidst the unpredictable nature of the market, Bitcoin’s ability to offer potential returns independent of traditional assets has become an attractive proposition for these managers.

Meanwhile, the potential for Bitcoin to continue its upward trajectory may hinge on broader macroeconomic factors. 

Unless there is a significant shift toward risk aversion in the market, many analysts believe that the next leg higher for BTC is becoming increasingly inevitable.

With this in mind, the QCP report offers two trade ideas for consideration. 

Firstly, the BTC Spot-Forward Basis is currently elevated, with the front-end yield exceeding 20%, presenting an opportunity for strategic positioning in the market. 

Secondly, deploying Accumulators, which allow investors to acquire BTC at a discounted price, could prove advantageous ahead of the anticipated interest from traditional finance players.

At the time of writing, the leading cryptocurrency is trading at $70,584, up by 5.12% over the past 24 hours.

The flagship cryptocurrency is up by almost 9% over the past week and by around 37% over the past month. It is just 4.6% away from its all-time high of $73,750 registered on March 14. 

Bitcoin ETNs to Debut on LSE

The LSE has announced plans to debut exchange-traded notes (ETNs) for Bitcoin and Ethereum on May 28. 

The decision follows the exchange’s previous announcement that it would accept applications for crypto ETNs during the second quarter of this year.

According to the notice released by the LSE, companies interested in listing their Bitcoin and Ethereum ETNs on the new market can begin submitting their applications starting from April 8, marking a significant step forward for the mainstream adoption of digital assets.

While both ETFs (exchange-traded funds) and ETNs offer exposure to a collection of assets, they differ in structure. 

ETFs represent partial ownership of the underlying assets, similar to a basket of stocks. 

On the other hand, ETNs function more like unsecured debt notes issued by a bank. 

When investors purchase an ETN, they effectively lend money to the bank in exchange for a note that guarantees returns based on the performance of a specific index or assets.

It is worth noting that the upcoming Bitcoin and Ethereum ETNs on the LSE will be subject to Financial Conduct Authority (FCA) regulations, limiting participation to “professional investors” only. 

This designation encompasses credit institutions and authorized investment firms operating within financial markets, while excluding retail investors from accessing these ETNs.

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