Bitcoin: The New Gold Standard for Economic Downturns?
A recent CNBC report highlights Bernstein Research's argument that Bitcoin (BTC) is an effective hedge against a possible economic downturn and the depreciation of the US dollar.
The financial services firm based on Wall Street suggests that Bitcoin’s better returns generate less interest than gold, which has been gaining popularity.
Although Bitcoin is the best-performing asset this year, with an increase of roughly 70% year-to-date, there are limited beliefs that this is a new cycle for Bitcoin and that fresh allocations are expected.
Bernstein analysts compared Bitcoin’s low interest to “hating on a faster horse” when compared to gold.
The report claims that both Bitcoin and gold perform well during massive monetary debasement events. However, Bitcoin tends to outperform gold during such crises.
For example, after the COVID pandemic resulted in monetary printing, Bitcoin outperformed gold by 2.9 times over about 3.5 years. Since fears of a banking crisis have increased this year, Bitcoin has rallied approximately 71% year-to-date, compared to gold’s rally of roughly 10% year-to-date.
Jan van Eck, CEO of VanEck, a giant in exchange-traded funds (ETFs), recently predicted that both gold and Bitcoin are poised for multi-year bullish runs.
As per the report, Bitcoin’s role as a hedge against a possible economic downturn and the depreciation of the US dollar is critical and should not be overlooked.
Bitcoin’s ability to outperform gold during crises is an added advantage that is why many investors consider it a crucial part of their investment portfolio.