As the capital markets continue to fret over rising inflation, it’s been Bitcoin that’s been getting the nod over gold lately by fund managers.
Lately, the leading cryptocurrency has also been juxtaposed with gold in terms of inflation hedging. That’s in addition to their comparisons as stores of value.
“I still think gold was probably an okay asset to own in this environment,” said Galaxy Digital Holdings CEO Mike Novogratz. “It’s just gotten crushed by bitcoin.”
Bitcoin’s price has risen over 100% in 2021 despite its latest pullback under $60,000. Gold, on the other hand, has been struggling to find strength amid a stronger dollar and the potential of rising interest rates in a recovering economy.
“Institutional investors appear to be returning to bitcoin perhaps seeing it as a better inflation hedge than gold,” JP Morgan analysts noted.
“The re-emergence of inflation concerns among investors during September/October 2021 appears to have renewed interest in the usage of bitcoin as an inflation hedge,” JP Morgan said further.
The introduction of the first Bitcoin futures exchange-traded funds (ETFs), led by the ProShares Bitcoin Strategy ETF (BITO) has also pushed the cryptocurrency into traditional finance circles. As such, more adoption is taking place on a massive scale.
“Bitcoin is just a better version of a store value and it’s being accepted at an accelerating pace … There are now over two hundred million people around the world that participate in the bitcoin ecosystem, and it continues to grow,” he added.
Bitcoin Price data by YCharts
Eclipsing Gold Over Time
Given gold’s standing as a store of value for hundreds of years, it’s difficult to fathom a relatively new asset unseating it. However, more and more fund managers continue to see its potential that can withstand the test of time.
“I think it’s probably going to be ten times better than gold over a long period of time … I’m not going to be surprised if bitcoin goes up at an exponential rate and gold goes up at a linear one,” said Skybridge Capital founder Anthony Scaramucci, who noted that Bitcoin could reach as high as $500,000 .
Legendary investor Paul Tudor Jones also threw his support behind Bitcoin, saying that the cryptocurrency is a better inflation hedge given the current market environment.
“Clearly, there’s a place for crypto,” Tudor Jones said. “Clearly, it’s winning the race against gold at the moment … It would be my preferred one over gold at the moment.”
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