Daily Market Recap - Bitcoin continues to attract attention

Denigrated by its opponents for its volatility and speculative nature, Bitcoin, which keeps breaking records, can have its uses within a multi-asset portfolio, says Robeco.

Bitcoin, which was worth less than $10,000 a year ago, now has a capitalization of more than $1 trillion, the Robeco note recalls. The best-known cryptocurrency hit a new record high on Wednesday at $64,895.22, as banks and businesses show increasing interest in the new asset.

According to research by Robecos multi-asset team, Bitcoin could make a 1% allocation in a standard, well-diversified multi-asset portfolio, provided certain risk controls and strict portfolio management rules are applied.

“Bitcoin is making headlines every day - not only because of its meteoric rise and unparalleled volatility but also because of the heated debates between its supporters and opponents,” Robeco explains in the note.

“But what piques our interest more is the growing consensus on the real nature of Bitcoin,” he adds. “In recent months, we've started to hear a clear and emphatic narrative explaining that Bitcoin is becoming a store of value taking the form of digital gold.”

As such, Bitcoin can play a role as a hedge against inflation, similar to gold, he adds.

“If you are looking for a potential hedge against inflation, a collapse in real bond yields, and/or a devaluation of the U.S. dollar, investing in digital gold could be a prudent step that helps to better diversify the portfolio,” the manager argues.

Meanwhile, Coinbase Global, the largest U.S. cryptocurrency trading platform, soared on Wall Street in its Nasdaq debut, giving it a valuation of about $100 billion and marking another milestone in the development of Bitcoin and other digital assets.

The stock opened at $381, up 52.4% from the benchmark price of $250. A share price of $381 gives Coinbase a valuation of $99.95 billion on a fully diluted basis and a market capitalization of $75.9 billion.

Coinbase's launch via a direct listing marks a victory for digital currency advocates in a year that has seen many high-profile companies, including Tesla, enter the sector.

Founded in 2012 in San Francisco, Coinbase claims 56 million users worldwide and $223 billion in assets under management, representing 11.3% of the crypto-asset market share.

The company was valued at just under $6 billion last September, but its value has risen alongside Bitcoin's.

(Chart Source: Tradingview 14.04.2021)

For the first quarter, as the price of Bitcoin more than doubled, Coinbase estimated its revenue at more than $1.8 billion versus $1.3 billion for the full year of 2020. Its quarterly net profit came in at between $730 million and $800 million, according to group estimates.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.