Analyst Responds to Couple Who Sold Everything to Buy Bitcoin: “Time Bomb”

The British newspaper The Telegraph, founded in 1985, 168 years ago, has an interesting column in which an investment director comments on the portfolios of its readers.

In this Wednesday’s article (14), Victoria Scholar, investment director at Interactive Investor, analyzed the portfolio of a couple who invested everything in Bitcoin (BTC) and Ethereum (ETH).

To be more precise, there is 900 thousand pounds sterling in BTC and 194 thousand pounds sterling in ETH. The amounts are equal to R$5.6 million and R$1.2 million respectively.

Since the paper is old and conservative, the analyst was shocked to see the above portfolio. In addition to not being diversified, as is usually the case, the teacher couple is 61 and 57 years old and does not belong to a generation so connected to technology.

“His portfolio, which consists only of Bitcoin, Ether and cash, would give most financial advisors a heart attack.”Victoria noted in the first paragraph. “To me it feels like a ticking time bomb.”

Teacher couple invests only in Bitcoin and Ethereum, which leads to the surprise of the investment director

When we talk about teachers and cryptocurrencies in Brazil, we can easily recall Jorge Stolfi, a professor at Unicamp who declared that Bitcoin “will cost millions of lives.” However, a few British professors took a completely opposite approach and bet everything on Bitcoin and Ethereum.

In a message to The Telegraph, the couple asked an investment director to analyze their portfolio.

“Dear Victoria, here is my portfolio, I would be interested in your opinion. We are a couple: a retired teacher of 61 years and a still active teacher of 57 years with two adult and independent children. We have a net salary of £48,000 per year.

A table will then appear showing the couple’s investments. £900,000 (R$5.6 million) in Bitcoin and £194,000 (R$1.2 million) in Ethereum. The highlight is that the assets are in ‘cold storage’, i.e. without an internet connection. Therefore, a good sign that they have studied good security practices.

Victoria Scholar, who has worked in the financial markets for more than a decade, was surprised by the couple’s profile. While he acknowledged Bitcoin’s 150% rise by 2023, he advised teachers to sell everything.

“Fortunately, this year’s crypto peak means now is not a bad time to sell your Bitcoin and Ether so you can build a safe, resilient and sensible portfolio.”

“You don’t have to go far back in the charts to see that gains can be quickly wiped out in this notoriously fickle asset class”the investment director continued. “Consider the 2022 crash a reminder of when Bitcoin ended the year worth about 1/4 [do que valia em janeiro].”

Like almost every conservative financial advisor, Victoria then suggests that the couple invest 40% of their capital in stocks and another 40% in bonds. Nothing was said about the remaining 20%, which could be a hidden suggestion that the couple should keep some of their cryptocurrencies or a reserve in British pounds.

“With an allocation of around 40% you could invest in a few core equity funds covering the world’s major investment economies”noted analyst Victoria Scholar after recommending the sale of the pair’s bitcoins and ethers. “I would then think of an allocation of about 40% to bonds.”

Explaining her recommendation, the Chief Investment Officer points out that the Central Bank of England is about to initiate interest rate cuts, which could increase bond dividends.

Although Victoria doesn’t mention this, it’s worth remembering that risky investments could also take off if interest rates fall, which is expected by experts like Arthur Hayes. So it is possible that the teacher couple has the perfect portfolio for 2024.

Bitcoin is becoming an increasingly reliable store of value

Some investors like Warren Buffett don’t like Bitcoin, partly because it doesn’t pay dividends. However, other investors believe that Bitcoin’s mathematical scarcity is enough to keep the cryptocurrency appreciating over time.

Although Bitcoin is still volatile in the short term, it is already recognized as a store of value by a recent study by the European Central Bank. Managers like Fidelity, who are trying to create the first Bitcoin spot ETF in the US, believe BTC should be present in retirement plans.

Even though the professor couple’s strategy is bold: with 100% of their portfolio in Bitcoin and Ethereum, it is possible that they have an edge on the market. In other words, they will be able to enjoy a great retirement as cryptocurrencies enter a new super cycle.

Source: Live Coins