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Israeli Pension Firm Generates Huge Profit from $100 Million Investment in Bitcoin

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Altshuler Shaham, the largest pension firm in Israel, has doubled its money after investing $100 million into the shares of Grayscale Bitcoin Trust (GBTC).

According to Israel’s Globes publication, Altshuler Shaham investment house bought GBTC shares at the end of 2020 when Bitcoin was trading around $21,000.

Gilad Altshuler, the co-founder and co-CEO of Altshuler Shaham, said: “The $100 million investment has become $200 million, and of the $200 million we have already sold about a third.” He further stated: “This is a new investment for us. It took a few months until we got all the relevant approvals and all the opinions that approved our investment in the field.”

When Bitcoin hit new highs in early February, the asset manager sold profits of around a third of the initial investment. At the present time, the investment house holds an estimate of $150 million worth of Bitcoin, with Altshuler saying that it may add more investments, but that depends on the price. He stated that they are a little bit intimidated by the speed at which Bitcoin climbs to the current prices, with its global market cap crossing the $1 trillion mark.

Altshuler Shaham is one of the leading investment houses in Israel, managing about $51.5 billion in long-term savings for pension and retirement funds as of the end of January. Currently, the investment house is the only institution in Israel that has invested such huge amounts of funds into Bitcoin.

This is not the first time when Altshuler Shaham bets on cryptocurrency. The asset manager is known to have participated in some Israel initial coin offering in 2017.

The Smartest Investors Buying Bitcoin

The news concerning Altshuler Shaham’s involvement in Bitcoins comes at a time when an increasing number of institutions are embracing the leading cryptocurrency. Bitcoin and its offerings are growing in popularity across the world. The digital asset has become a main attraction for major public companies, with some viewing it as a hedge against inflation and as a new capital allocation strategy designed to maximize long-term value for shareholders.

Early this week, Meitu, a Chinese firm that makes a photo editing app, bought Bitcoin and Ether, becoming one of the latest company to invest in crypto assets. The Hong Kong Exchange-listed firm purchased $17.9 million worth of Bitcoin and $22.1 million worth of Ether on March 5.

The Chinese app maker follows the likes of MicroStrategy Inc, Square Inc, and Tesla electric car company in buying Bitcoin. However, Meitu appears to be the first major firm to purchase Ether, a crypto that is supported by the Ethereum blockchain. Meitu said that its bet on Ether will aid its general blockchain endeavours while the Bitcoin investment is part of its asset allocation strategy.

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General Motors May Follow Tesla in Accepting Bitcoin Payments but Will Not Invest in Bitcoin – GM CEO

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General Motors Company may be open to accepting Bitcoin as an official method of payment in the future.

During the firm’s fourth-quarter earnings call conference, General Motors CEO, Mary Barra, disclosed that the automobile company may accept the crypto as a form of payment. Barra revealed this probability when she answered an inquiry initiated by an analyst at Morgan Stanley, Adam Jonas. He asked whether GM might follow other firms, notably Tesla in adding Bitcoin to their balance sheet or accepting it as a payment method for automobile purchases.

Jonas asked: “…a $45,000 BTC is optimal for a big-ticket purchase like a car. So how does GM think about this opportunity?”

Barra responded that General Motors has no plans to invest in Bitcoin, but said that the manufacturer would monitor customer demand for crypto as a method of payment for vehicles and services. Barra told reporters during the earnings call conference: “We don’t have any plans to invest in bitcoin, so full-stop there. This is something we’ll monitor and we’ll evaluate. If there’s strong customer demand for it in the future, there’s nothing that precludes us from doing that.”

During this discussion, it was revealed GM has been seeking out customer feedback on the use of crypto as a form of full or part payment.

The Detroit-based motor vehicle producer was one of the first manufacturers to begin investing heavily in the blockchain space. The company started patenting blockchain uses for personal security data and driverless vehicles. GM partnered with blockchain specialists “Spring Labs” in 2019.

Crypto Making Way into Traditional Finance

Based on its announcement, GM is being tapped as the likely car manufacturer to follow Tesla’s footsteps and accept cryptocurrency as payment. Last month, Tesla moved $1.5 billion worth of its capital into Bitcoin, amid CEO Elon Musk repeatedly showing admiration of the leading crypto asset alongside altcoin Doge. Last week, Musk tweeted: “You can now buy a Tesla with Bitcoin”.

Although Musk did not provide several details of the methodology of the crypto payments, he stated that Bitcoin paid to the car producer won’t be converted to traditional fiat currency and the firm would use internal and open-source software to process the payments.

Cathie Wood, the CEO of ARK Investment Management LLC, which is a prominent investor in Tesla car producer, recently said that we should expect tech companies to add Bitcoin to their balance sheets in the near future. She revealed that big firms have been asking her whether it was a good idea to allocate huge sums of cash to Bitcoin or other cryptocurrencies.

Firms outside the US are now following MicroStrategy and Tesla in purchasing cryptocurrencies. For example, Hong Kong-listed Meitu bought $22 million of Bitcoin and $18 million of Ether to diversify its cash reserve into cryptocurrencies. Aker Norwegian oil service company also recently invested $58 million in Bitcoin and related blockchain services.

Tesla Sold $272 Million Worth of Bitcoin in Q1 2021

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Tesla Inc. has sold 10% of its Bitcoin holdings. In an investor call event, the electric vehicle maker reported its Q1 2021 earnings report and revealed the sale of $272 million of its Bitcoin holdings and a “$101 million positive impact”.

The $272 million sale will leave at least $1.33 billion in Bitcoin on Tesla’s balance sheet, according to the price at February 8 transaction.

The sale contributed to a record quarterly net income for the company of $438 million.

During the company’s earnings call, Zach Kirkhorn, Chief Financial Officer at Tesla, stated: “Tesla is watching how the market develops and listening to what our customers are saying but thinking about it from a corporate treasury perspective, we’ve been quite pleased with how much liquidity there is in the Bitcoin market.”

Kirkhorn further added that Tesla ” believes, long term, in the value of Bitcoin, so it is our intent to hold what we have long-term and continue to accumulate Bitcoin from transactions from our customers as they purchase vehicles.”

CEO Elon Musk tweeted in a reply that Tesla sold off part of its Bitcoin holdings to demonstrate the crypto’s liquidity as an alternative to holding cash on the balance sheet.

Musk further stated that he has not sold any of his personal Bitcoin.

His reply was a response to a separate tweet from Barstool Sports president Dave Portnoy who claimed that Musk bought the cryptocurrency, pumped it, and then dumped it.

Companies Embracing Crypto

According to a disclosure filing with the US SEC, Tesla first purchased $1.5 billion in Bitcoin in February this year and Coinbase Global Inc is known to have facilitated the purchase.

Last month, Tesla also made announcement that it started accepting payments in Bitcoin for its motor car sales and related services. Musk stated that the company would retain those payments in their cryptocurrency form, not converting them to fiat.

Bitcoin price increased throughout the first quarter buoyed by Tesla’s purchase and bullish buys made by MicroStrategy software company, Jack Dorsey’s Square payment company, and other public companies.

Bitcoin now is the most preferred asset to own among institutional investors. A rising number of companies have adopted Bitcoin as a treasury reserve to increase shareholders value and to hedge against fiat inflation.