Will book profit in cryptocurrency Bitcoin at $150,000 levels: Chris Wood

Christopher Wood, global head of equity strategy at Jefferies who holds 10 per cent weight in Bitcoin in his global portfolio for a US dollar-denominated pension fund plans to book profit in the cryptocurrency once it hits the $150,000 mark, up nearly 53 per cent from the current levels of $98,300 levels.  

 

The initial stake in Bitcoin in the pension fund portfolio was taken in December 2020 when the price was $22,779. Wood also has a 5 per cent weight in a Bitcoin exchange traded fund (ETF) in his global long-only equity portfolio. The base case, Wood said, is not to try and trade these positions, most particularly in the pension fund portfolio. 

 

 

“Still, for those with a more tactical focus, or owning Bitcoin on leverage, GREED & fear’s view is that $150,000 is a good price level to start taking some profits since GREED & fear’s base case is that Bitcoin will rally three times in this post-halving cycle since the trend has been for the capital gains on holding Bitcoin to more than halve following each halving cycle,” Wood wrote in his recent weekly note to investors, GREED & fear.

 

The conviction for Wood to hold on to bitcoin for now and the belief that it will rise to $150,000 levels going ahead stems from the fact that US President elect, Donald Trump has signaled a change of regulatory policy towards crypto at the Securities and Exchange Commission (SEC). 

 

“This is now surely coming. It is also worth noting that Howard Lutnick, the co-chair of Trump’s transition team as well as Trump’s pick to be Commerce Secretary, is also a champion of Bitcoin and crypto. It is also the case that Lutnick is chief executive officer of Wall Street firm Cantor Fitzgerald, which is one of the major custodians of the crypto world’s major stablecoin Tether in terms of where the latter deposits its dollars,” Wood wrote.

 

Up, up and away

 

Bitcoin, meanwhile, has gained 164 per cent in the last one year - from a level of around $37,000 to nearly $98,300 now. This is despite the cryptocurrency halving in April 2024. 

 

After the first halving on 28 November 2012, Bitcoin rose about 90 times in the following 12 months, while the second halving on 9 July 2016 resulted in a 30-fold gain within 18 months.

 

As for the third halving on 11 May 2020, Bitcoin rose 7.5-fold in the following 11 months to a high in April 2021 and was up eight-fold in 18 months to a then all-time-high of $68,992 in November 2021. After the latest halving on 19 April 2024, Bitcoin has since risen by 54 per cent to $98,300 levels. 

 

Despite the price surge, Wood does not believe that Bitcoin is a substitute for gold, whose price has risen by 73 per cent, 54 per cent, 50 per cent and 40 per cent against the yen, the renminbi, the euro and the Swiss franc respectively since the start of 2023, but should only be viewed  as a digital alternative.

 

“It is becoming risky to ignore crypto for many institutional investors who have still not focused on it. This is because the Trump administration’s seeming championing of it means it is about to move into the mainstream. Still, GREED & fear does not view Bitcoin as a substitute for gold but simply as a digital alternative,” he said.