With oil prices trending higher, among other factors, market participants are bracing for a renewed round of elevated inflation. That could stoke renewed interest in traditional inflation-fighting asset classes, but investors may not want to overlook the ability of bitcoin to act as inflation protection. While digital currencies, including bitcoin, endured the “crypto winter” last year as inflation was historically high, some market observers believe there’s growing evidence to support bitcoin’s inflation-topping credentials. Investors can access that protection with funds like the Bitwise Bitcoin Strategy Optimum Roll ETF (BITC).
Launched by San Francisco-based Bitwise earlier this year, BITC is a futures-based bitcoin ETF, but it’s a departure from competing products in the space because many futures-based ETFs, regardless of underlying asset, aren’t great long-term investments. In positive fashion, BITC goes the other way.
“The fund provides directional exposure to bitcoin via regulated futures contracts and seeks to maximize potential roll returns through a selective analysis of bitcoin futures beyond front- or near-month contracts,” according to the issuer.
Fight Inflation With BITC
In addition to its accommodative structure, BITC has the goods when it comes to implementing some inflation protection within portfolios — a potentially desirable attribute in the current environment.
“G7 central banks, including most importantly the Federal Reserve, will not be able to exit from unconventional monetary policy in a benign manner and will ultimately remain committed to ongoing central bank balance-sheet expansion in one form or another,” said Christopher Wood, global head of equity strategy at Jefferies, in a recent report.
Wood added that a failure to depart “unorthodox monetary policy” could propel the demise of the U.S. dollar as the world’s reserve currency. Should that scenario play out, it would benefit gold and other alternative assets such as bitcoin.
In addition to inflation-fighting potential, bitcoin could prove advantageous should traditional global financial systems experience upheaval. Obviously, that’d be ominous, but it could underscore the benefits of bitcoin and assets such as BITC.
“Bitcoin’s narrative as an insurance policy against financial system instability gained momentum this year in the wake of the regional banking crisis in the U.S. Several institutions, including Signature Bank, Silicon Valley Bank and First Republic Bank suffered earlier this year as customers lost confidence in their stability and withdrew their funds in panic,” reported Tanaya Macheel for CNBC.
The Bitwise ETF has a net expense ratio of 0.85%.
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