Asset Manager Pimco to Increase Its Presence in Crypto

Bob Coiney

October 21, 2021

Over the last 12 months, cryptocurrencies have found their way to the big scene in the world’s market and constantly dominate the headlines. News of the value of several coins reaching all-time highs and business tycoons such as Elon Musk adopting crypto is almost commonplace these days. Although crypto space is still in its cradle stage, it has not stopped global corporations from trooping into it and staking their future in it. 

A growing number of businesses across a wide range of industries – from major tech to airlines – are embracing cryptocurrencies and allowing customers to pay for their goods and services with them, making the crypto world expand exponentially in different parts of the world. 

Pimco to Buy More Crypto

The latest to announce their interest in the crypto space is fixed-income giant Pimco. According to Pimco’s chief investment officer Daniel Ivascyn, the financial giant has dabbled in cryptocurrencies and aims to gradually invest more in digital assets that have the potential to disrupt the financial industry.

In a statement, Ivascyn gave more details on the firm’s recent activities in the crypto space; he said, “now we’re looking at potentially trading certain cryptocurrencies as part of our trend-following strategies or quant-oriented strategies, then doing more work on the fundamental side. So this will be a gradual process where we spent a lot of time on the internal diligence side speaking to investors. And we’ll take baby steps in an area that’s rapidly growing.”

Bitcoin Hits an All-time High

Prior to this time, institutional asset managers have been slower in embracing cryptocurrencies than retail traders, but following the recent surge in bitcoin, their adoption is growing rapidly. Following the successful launch of the first U.S. bitcoin futures exchange-traded fund, bitcoin hit a new all-time high. It is widely regarded as a watershed moment for the embryonic crypto industry, which has long pushed for broader Wall Street adoption of digital currencies. The world’s most valuable cryptocurrency increased by about 4% to $66,416.86, breaking the previous high of $64,899 established in mid-April.

Pimco, which was founded in 1971, is a global asset manager specializing in active fixed-income securities. As of December 31, 2020, the firm’s assets under control reached $2.2 trillion. Some of Pimco’s hedge fund portfolios are already trading crypto-linked securities, according to Ivascyn. He reportedly said, “we’re trading from a relative value perspective. So we’re not taking directional exposure, but we’re looking to take advantage of mispricings between the cash product, popular trust that trades on the exchange, and then the futures. So that was a starting point for us in a very narrow segment of our business.”

More Firms to Adopt Crypto

For much of 2021, institutions have been pouring money into crypto investments, reflecting the growing acceptance of digital assets by the general public. According to a September survey by European investment management Nickel Digital Asset Management, nearly two-thirds of worldwide institutional investors with no cryptocurrency exposure planned to make their first investments within the next 12 months. According to data from Chainalysis, institutional money was the key driving force behind Asia’s 706 percent increase in crypto transactions over the past year. Experts believe more firms will be following Pimco in the coming days.