Jefferies keeps 5% Bitcoin allocation amid concerns over USD stability

Chris Woods, the chief strategist at investment banking firm Jefferies, has disclosed that the firm keeps 5% of its allocation in Bitcoin through exposure to VanEck spot Bitcoin exchange-traded fund (ETF) HODL.

In a post shared on X by the Head of Digital Assets at VanEck, Mathew Sigel, he noted that BTC accounts for a higher allocation of Jefferies’ long-only portfolio than its Microsoft and Samsung stocks.

Jefferies’s interest in BTC is not without any reason and represents a strategic hedge against events that could lead to the devaluation of the USD. According to Woods, Bitcoin represents a solution to any crisis that might affect the US dollar if the market should dump US Treasuries.

He said:

“Bitcoin provides a potential solution to the calamity which will face the current USD fiat system should markets conclude that G7 bonds, in particular Treasuries, are no longer risk-free.”

Jefferies Bitcoin Allocation. (Source: X/ Sigel)

Woods also compared Bitcoin to Gold, noting that if the market sees Gold as a hedge to currency debasement in the G7, Bitcoin could fall into the same category. He added that Bitcoin is closer to the mainstream than ever before since the Securities and ExchangeExchange Commission (SEC) approved Bitcoin ETFs to trade, and presidential candidate Donald Trump is already advocating for digital currency on a national level.

VanEck identifies a multiasset portfolio as a solution to limited interest in BTC from brokerages

Meanwhile, Sigel noted that hedge funds have been responsible for most of Bitcoin’s institutional purchases in 2024. According to him, investment advisors have been slower with integrating BTC into their portfolios as their allocation only grew by 4% compared to 38 for hedge funds.

However, VanEck already plans to fix this with its multi-asset portfolio, which includes Bitcoin. Several asset managers are already marketing and distributing these portfolios, and this will likely be the short-term solution until Brokers start allocating more to the asset.

Woods sees potential in Lummis Bitcoin reserve bill

Meanwhile, Woods also discussed the proposed Bill by pro-crypto Senator Cynthia Lummis that the US government should create Bitcoin reserves similar to gold reserves. According to him, the proposal, which comes on the heels of Trump’s promise to establish a national stockpile of BTC, is an interesting one even if it will not translate into backing the US dollar with BTC.

However, he noted that it is highly unlikely for the Bill to become law in this current Congress. Still, the outcome of the November presidential elections could determine its reception in the next Congress. Woods observed that around 50 million voters hold Bitcoin. Therefore, the idea of a Bitcoin reserve might have more political capital than initially thought.

His opinion highlights the reportedly growing bipartisan support for a US Bitcoin reserve after initial skepticism about whether the idea is feasible. At least one Democrat legislator, Representative Ron Khanna, has openly voiced his support for the US having Bitcoin as a reserve asset, noting its “potential for appreciation” and how it allows the US to “set the financial standards.”

Still, bipartisan support might not be enough to make a Bitcoin reserve acceptable to most Congress members. Experts believe that the US creating a Bitcoin stockpile will be favorable for the asset, but it might not do much for taxpayers and could create a much bigger liability for the Federal Reserve.

They said:

“Holding Bitcoin would create a large operating loss for the Fed. Bitcoin pays no interest, but the Fed has to pay interest on the money it borrows to finance its investments. At current rates, every dollar borrowed to hold Bitcoin would cost the Fed 5.4 percent in annual interest.”

With the experts noting other disadvantages, such as the political pressure and Bitcoin’s positioning as a replacement for the US dollar, they concluded that it is doubtful that the US Treasury will embrace any proposal that explicitly promotes the adoption of Bitcoin.

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