Jurrien Timmer, global head of macro at Fidelity, wrote in an X post on Wednesday: Bitcoin It is a means of currency preservation and inflation hedging similar to “index gold”.
The analyst believes that both Bitcoin and gold currently have different but attractive risk/reward ratios, and that the two may be players on the “same team” in terms of investment thesis.
Gold and Bitcoin: A historical review
like timoBitcoin has started rising again this year, following “the pattern of previous boom and bust cycles.”
The asset regained $35,000 on Wednesday, with market participants excited about the potential approval of a Bitcoin ETF spot within the next two months. It is said that as investors lose confidence in traditional financial methods, the price of gold has also risen, becoming a reason for investors to “move to quality assets”, thus pushing its price to the same level as gold.
Historically, in structural regimes of high inflation, negative real interest rates, and/or excessive money supply growth, gold has tended to shine and gain market share relative to GDP.
Investors often compare Bitcoin to gold because of its strong monetary properties, including credible scarcity compared to fiat currencies. Some, such as Michael Saylor, believe Bitcoin is a better alternative due to its digital advantages and early stage in the adoption cycle.
Although Bitcoin is still much more volatile than gold today, Timmer noted that this works in Bitcoin’s favor during bull markets. When comparing the risk-return of BTC to other asset classes since 2020, he said that the digital currency is “in a different universe.”
Yes, Bitcoin is down 54% from its two-year high, but it’s also up 84% from its lows. Government bonds can’t match the risk-reward calculation, and neither can many other asset classes, at least for now.
Fidelity Bullish on Bitcoin
Fidelity has run a digital assets division for years, advocating for cryptocurrencies as an investable asset class, providing custody and trading services for Bitcoin and Ethereum.
The asset management firm is actively working with regulators on a spot application for a Bitcoin ETF, an investment product expected to attract billions of dollars of institutional capital into Bitcoin. BlackRock is currently fighting with Fidliety for SEC approval, which analysts believe could be completed as early as January.