BITCOIN'S !WOW! BELLYACHE : !FUTURES - OPTIONS!

Cryptocurrency funds have gathered $4.2 billion in flows for this year through March 1, Coinshares said.

NEW YORK : The rollercoaster ride in bitcoin since the start of the year has not dampened wealth manager Jim Paulsen's enthusiasm for cryptocurrency.

Yet Paulsen, Chief Investment Officer for Leuthold Group, which manages $1 billion, cannot own bitcoin in client portfolios due to regulatory constraints.

This has left him on the sidelines watching the world's most popular cryptocurrency surge more than  900% since its March lows in volatile trading that also saw bitcoin lost more than 20% in the span of a few days.

''What I like about bitcoin is... its correlation to stocks and other assets is extraordinarily independent,'' said Paulsen, who remains frustrated that he cannot own it for clients.

The promise of an asset class that behaves differently than stocks or bonds is leaving portfolio and wealth managers scrambling to own cryptocurrencies, if they can.

Many view bitcoin as good inflation hedge, Nearly 20% of advisers are contemplating investing in cryptocurrencies this year due to concerns about inflation, up from 6.3% in 2019, according to a report from Citi.

Still, number of advisers say they are unable to own bitcoin for their clients and until they can hold it in an exchange traded fund or mutual fund that clears legal hurdles common for any investment.

Should that happen, institutional money could flow in and push the asset class higher, analysts said.

BlackRock Inc, the world's largest asset manager, said on January 21 it was adding bitcoin futures as eligible investments for certain funds. Fund experts expect other asset management firms to follow suit.

Yet the US Securities and Exchange Commission does not recognize cryptocurrencies as a security like a stock or a bond, and has not ruled whether mutual funds can can own them directly, said Robert Jenkins, Global Head of Research at Refinitiv Lipper.

So, it remains unclear whether any mutual funds currently own bitcoin because they are not required to disclose it, he said.

In the United States, eight firms have tried without success since 2013 to create bitcoin ETF, according to Todd Rosenbluth, Director of ETF and Mutual Fund Research at New-York- based CFRA.

The SEC did not respond to questions for this article.

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