Wood turned heads in December when he trimmed his positions in gold to take an exposure to Bitcoin for the first time ever.
“Remember, institutional ownership of Bitcoin has only just begun. It should also be remembered that Bitcoin rose 85 times in the 12 months after the first November 2012 halving, and by 30-fold in the 18 months after the July 2016 halving,” Wood said in his latest
GREED & fear report.
So far, Bitcoin has risen only 418 per cent since the previous supply reduction in May-June of 2020, Wood said.
Bitcoin again grabbed headlines this week after Elon Musk-owned electric carmaker Tesla announced that it had converted $1.5 billion of its cash holding into Bitcoin and will accept the cryptocurrency as payment for its products in the future.
Wood believes other technology companies in Silicon Valley will follow suit as “Where Musk goes, others will now surely follow; most particularly as tech companies will, in
GREED & fear’s view, want to be seen as hip in the eyes of the millennials.”
Wood believes it is only a matter of time before the Securities Exchange Commission approves the first exchange-traded fund for Bitcoin.
Indian investors will most likely miss out in the rally in Bitcoin that Wood is projecting as the government is all set to ban private cryptocurrencies in order to promote its own digital currency. The government is likely to table a bill in Parliament to this effect. However, it still remains to be seen if the government allows investors to hold cryptocurrencies as an asset class.
On India, Wood said the country is emerging as the “best post-Covid recovery story” given its rapidly declining active cases in the past few months and the rollout of Covid-19 vaccines.
In terms of portfolio strategy, Wood retained his bias towards cyclical sectors, as he believes rising inflation expectations in the US are a sign that the cyclical recovery is getting entrenched. In that context, he expressed his bullishness on bank and energy stocks.