Bitcoin comes of age as a new inflation hedge
Bitcoin has risen by 370% since mid-March, with its ability to hedge against inflation a big part of its appeal.
“A fraud, a rip-off, a sucker’s bet.” But for all the invective heaped upon it, bitcoin continues to soar, says Edward Robinson on Bloomberg. The cryptocurrency eclipsed $20,000 last week and then charged on, briefly hitting $24,000. Bitcoin has risen by 370% since mid-March.
But this is still a highly volatile asset that can plunge by 10% at the drop of the hat. Investors who bought in at the height of the last boom in 2017 found themselves enduring a long bear market. Bitcoin isn’t even this year’s best-performing digital currency: its 184% gain is overshadowed by the near 360% rise of Ether, another cryptocurrency, notes Paul Vigna in The Wall Street Journal.
The big difference from 2017 is that professional investors are now jumping on board. British investment manager Ruffer recently disclosed that it “was holding about $744m of bitcoin”. The currency is increasingly regarded as a mainstream asset class and source of diversification, says Izabella Kaminska in the Financial Times. This year “bitcoin went institutional”. Perhaps the best argument in the currency’s favour is that it is “still standing”: after 12 years of scrutiny, hacks and speculative frenzy, bitcoin is resilient, “if not flourishing”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Its potential as an inflation hedge has long been part of its appeal, says Noelle Acheson on coindesk.com. Only 21 million bitcoins will ever be created. It is also increasingly regarded as protection against all the ills that can accompany an inflationary disaster: authoritarian governments and social instability. Bitcoin might seem weird, but then conventional politics and economics is also getting weird – witness the rising popularity of “modern monetary theory” (MMT). “More than a hedge against inflation,” its fans hope bitcoin is “a hedge against ‘crazy’.”
-
Revealed: the best funds to buy before the end of the tax year
Looking to add more investments to your portfolio but not sure where to start? We reveal the best funds to buy now as the end of the tax year edges closer.
By Katie Williams Published
-
4 tax tips for the Bank of Mum and Dad before the end of the tax year
Parents and grandparents wishing to gift money in a tax-efficient way need to be aware of the looming 5 April end-of-tax year deadline. Here are our tips to beat the deadline.
By Ruth Emery Published
-
What to consider before investing in small-cap indexes
Small-cap index trackers show why your choice of benchmark can make a large difference to long-term returns
By Cris Sholto Heaton Published
-
Why space investments are the way to go for investors
Space investments will change our world beyond recognition, UK investors should take note
By Merryn Somerset Webb Published
-
Time to tap into Africa’s mobile money boom
Favourable demographics have put Africa on the path to growth when it comes to mobile money and digital banking
By Rupert Hargreaves Published
-
M&S is back in fashion: but how long can this success last?
M&S has exceeded expectations in the past few years, but can it keep up the momentum?
By Rupert Hargreaves Published
-
The end of China’s boom
Like the US, China too got fat on fake money. Now, China's doom is not far away.
By Bill Bonner Published
-
Magic mushrooms — an investment boom or doom?
Investing in these promising medical developments might see you embark on the trip of a lifetime.
By Bruce Packard Published
-
What pension providers don't tell you about your retirement money
Check the small print from your pension provider or risk losing thousands.
By Merryn Somerset Webb Published
-
Should you invest in sector funds?
Sector funds can be a useful way to fine-tune a portfolio or track a theme, but check what the index holds.
By Cris Sholto Heaton Published