British asset manager Ruffer has outlined how the excesses of the crypto bull market triggered the sale of its exposure to bitcoin in April.
“Bitcoin may yet fulfil its potential, but the market displayed many signs of froth — retail speculation, excessive leverage, the Coinbase IPO, Tom Brady’s laser eyes, Dogecoin, Elon Musk hosting Saturday Night Live, $60m non-fungible tokens (NFTs), etc.,” said Ruffer Investment Company Limited in a year-end review for the 12 months ending June 30, 2021.
Ruffer, which had made an initial investment of roughly $600 million on bitcoin in November of last year, sold its exposure at the top of the market in April — when bitcoin’s price was fluctuating between $50,000 and $65,000.
The trade proved a “significant contributor” to Ruffer’s performance over the past year, the company said, contributing +515 basis points (bps). The asset manager had also gained exposure to bitcoin through proxy firms MicroStrategy and Galaxy digital, which again performed well before being sold in February.
All told, Ruffer made a quick $1.1 billion off its bitcoin bet, according to an article published in the Sunday Times on June 6. But the company now feels there is no place for the cryptocurrency in its portfolio.
“In the short term at least, bitcoin was exhibiting the characteristics of a risky, speculative asset and therefore no longer fulfilled the portfolio role we had intended for it as a protective and diversifying asset,” said the company in its year-end review.
Update: A previous version of this article suggested Ruffer had made a profit of over £1 billion on its bitcoin trade. It has been updated to reflect that the profit was in fact over $1 billion in U.S. dollars.