Bitcoin: South African Hedge Fund Opens The door, While Meme coins are “pure gambling”

Bitcoin may have a place in a portfolio. The tens of thousands of meme coins, much less so. Adam Yates, head of distribution at Peregrine Capital, one of South Africa’s oldest private hedge fund managers, has drawn a particularly clear line between the two. He holds a small BTC exposure himself. His judgment is far harsher when it comes to much of the rest of the crypto market.

Bitcoin earns a small place in the portfolio

Speaking at the Moneyweb Summit, Adam Yates acknowledged that he personally holds Bitcoin and said that many investment professionals he knows also have exposure, generally at very limited levels.

This caution directly echoes BlackRock’s recent recommendation to allocate around 1% to 2% of a diversified portfolio to Bitcoin. The idea is therefore no longer necessarily to make BTC a dominant asset. A few percentage points may be enough.

Yates primarily compares Bitcoin with gold. Both derive part of their value from their scarcity and from the confidence people place in them. In BTC’s case, the 21 million-unit cap gives that scarcity a predetermined monetary rule.

One obstacle remains, however: volatility. In Yates’s view, Bitcoin would need to become much less violent in its price movements before becoming genuinely comfortable for the ordinary investor.

Meme coins take a beating

His tone changes completely when he moves beyond Bitcoin.

Yates describes the tens of thousands of meme coins as “pure gambling” and believes that a large proportion of them are probably scams. The distinction matters: buying BTC for limited exposure to a scarce monetary asset has, in this view, nothing to do with chasing a token launched around a meme, celebrity or trend lasting a few days.

The contrast is particularly visible in South Africa, where Bitcoin and stablecoin payments rose 176% year on year. Part of the market is therefore beginning to move beyond pure trading to support purchases, transfers and payments.

The country is also regulating service providers. The FSCA notably requires authorization for providers of crypto-asset-related services.

Speculation has obviously not disappeared. It simply coexists with more practical uses.

Blockchain attracts more interest than crypto

Yates goes even further: in his view, blockchain technology represents a more obvious opportunity than most cryptocurrencies themselves. He expects decentralized ledgers to gradually enter a large part of the financial markets.

Stablecoins also occupy a distinct place in his reasoning. Their ability to digitally represent a currency such as the dollar enables uses very different from those of a meme coin: settlement, transfer of value, commerce or access to a foreign currency.

This shift is already becoming apparent in South Africa. It comes, however, as Pretoria considers tightening the rules on certain cross-border crypto transfers.

Peregrine Capital’s position ultimately sums up the market’s new dividing line rather well. Bitcoin is not receiving a blank cheque: its risk remains high and its allocation remains small. It is gaining something more interesting—a now-defensible place in a traditional portfolio. Meme coins, meanwhile, have evidently not won that battle.