We find it wonderful that so many new investors are embracing the ease of direct exposure through Spot ETFs. Over the past 6 years we have argued that bitcoin and digital assets are the first new asset class for investors in generations. Most importantly, bitcoin is a natural hedge against any follow-on banking crisis, concerns about excess printing of the US dollar, and inflation. As a result, at certain times when equity markets have weakened, the Fund’s bitcoin exposure has hedged the price decline held by the Fund’s exposure to transforming companies like Block Inc (SQ), Nu Holdings (NU), and Roblox Corp (RBLX). The fact is that growth companies can carry high beta risk, so trading or holding a non-correlated asset or arguably even an inversely correlated asset class can help to manage certain types of systemic risks. To be clear, we do not hold Bitcoin directly in the Fund– it comes through holdings in Spot ETFs, MicroStrategy (MSTR), and companies in the Bitcoin mining industry.
Equally as important is how companies like Accenture (ACN), Visa (V), and International Business Machines (IBM) are reinventing themselves through investments in companies aligned with Blockchain technology. For example, IBM’s global food supply tracking efforts have made meaningful progress. In a Fresh Produce Journal article, Michael Barker highlights that the SecQuAL project using the IBM platform “finds multiple benefits for the tomato and wider fresh produce industry in its use of blockchain technology that secures storage and transfer of data to form a thread detailing the whole process from farm to fork”.1 Wrapping the IBM brand as an “IBM Trust” that implements blockchain technology helps build confidence that the supply chain solutions packaged by the company are secure, efficient, and with integrity. Let’s face it, our supply chain has many different problems that impact trillions of dollars. Why IBM? Why not!
Again, we highlight IBM’s progress with developing its position in blockchain technology to explain the impact that will come from this technology. It will support the production of trillions of dollars’ worth of goods and services, as it affects industries like manufacturing, healthcare, and yes, asset management. This is why tokenization is so important and why a portfolio needs both equities and Spot Bitcoin involved in the build out of digital assets. Think about blockchain as the distributed ledger that creates enduring and unalterable records that can be programed as tokens. Forget price! Think about the benefits of transparent information on a real time basis, that is reliable because it has been verified independently and triple checked. Also, let’s not forget that Bitcoin may not be the only solution that changes this world.
*BPs: A basis point (BP) is a unit that is equal to 1/100th of 1%.
1 https://www.fruitnet.com/fresh-produce-journal/blockchain-technology-offers-major-boost-to-tomatoes/258917.article
2 https://foodinsight.org/wp-content/uploads/2019/05/IFIC-Foundation-2019-Food-and-Health-Report-FINAL.pdf
3 https://amwayconnections.com/healthy-living/consumers-want-traceability-transparency-in-their-products/
4 https://nielseniq.com/global/en/landing-page/label-insight/