Will Hobbs is Chief Investment Officer at Barclays Wealth & Investments
Barclays Wealth & Investments
- The zeal for Bitcoin is “increasingly cultic” according to Will Hobbs, Chief Investment Officer of Barclays Wealth & Investments.
- Hobbs also said that a surge in interest rates could hurt the world’s largest cryptocurrency.
- Big names like BlackRock, however, are increasingly interested as the Bitcoin rally continues.
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Bitcoin sounds “increasingly cultic” and could turn out to be a “flightless bird” if interest rates rise, said the chief investment officer of a large asset manager.
Will Hobbs, CIO Barclays Wealth & Investments, said his company is currently not interested in the world’s largest cryptocurrency despite the recent record rally. He added that he thought the currency was being propped up by “a lot of magical thinking”.
Bitcoin surged above $ 50,000 for the first time last week and topped $ 53,000 on Friday. The growing interest of big companies from Tesla to BlackRock has given the rally fuel and legitimacy.
According to analysts at JPMorgan, private investors remain the main drivers. You said in a note last week that there has been “relatively little institutional flows” in the past 5 months.
Hobbs said Barclays Wealth Management has stayed away from cryptocurrency largely because of its wild price swings, a view many money managers share.
“It’s many times more volatile than our white-knuckle-ride asset class, which is emerging market stocks,” he told Insider.
“In order for an asset to be included in our toolkit for asset classes, it must fulfill a few things. On the one hand, it must of course generate a positive expected return. On the other hand, it must have a certain attractiveness for diversification.
“Now, over time, Bitcoin may well satisfy both of them. But right now it’s very difficult to say.” Hobbs did not rule out ever looking into Bitcoin, saying, “We’ll wait on the sidelines and watch others.”
The investment boss said a bigger concern is the zeal that Bitcoin is generating. “It just sounds like religion … it sounds increasingly cultic,” he said.
“I’m afraid all the ideas for using Bitcoin to replace all kinds of money are just wild.”
However, a handful of large companies have warmed to Bitcoin and cryptocurrencies in recent weeks.
Elon Musk’s electric car company Tesla is the most notable company, investing $ 1.5 billion in Bitcoin in January. BNY Mellon, Mastercard and BlackRock are among the other companies that have taken steps in this sector.
Rick Rieder, BlackRock’s chief investment officer, told CNBC Thursday that customers are looking for other stores of value in fear of inflation.
“People are looking for places that, assuming inflation will go up and debt go up, could go up in value. So we started looking into that a little,” he said.
Many analysts said unprecedented stimulus from governments and central banks, which have boosted almost all markets, was the main driver of the Bitcoin rally.
Hobbs said he thinks changing this environment of ultra-cheap borrowing could damage cryptocurrency.
“My guess is that when real rates turned positive, Bitcoin [will] suddenly look like a pretty flightless bird. Because if I can get a positive return by lending to the US or UK government, why will I own Bitcoin? “
Hobbs said it was too early to determine the exact nature of bitcoin. “At the moment it is primarily a store of value that is supported by and supported by a lot of magical thinking [a] great momentum narrative. “
“It shows the narrative power of the markets … similar to the Reddit story,” he said, referring to the GameStop saga.