After a year where many G7 central banks began printing trillions of dollars worth of stimulus to help weather the storm of COVID-19, many analysts and economists worry of massive inflationary pressures.
Seemingly out of the control for retail and institutional investors, was there any relatively safe, long-term hedges against these harmful externalities?
It seems like Bitcoin (BTC) may be that hedge.
Famed hedge fund billionaire Paul Tudor Jones so much, , recently ty0pd clients, in a note, that he purchased Bitcoin as a hedge against the inflation as a reuslt of centrla bank moeny printing.
On Thursday, Jones spoke on CNBC, discussing his increasingly bullish views on Bitcoin, naming it one of the best inflation hedges.
“I like bitcoin even more now than I did then. I think we are in the first inning of bitcoin and it’s got a long way to go.”
BTC has seen a large rise in 2020, having passed $15,000 (USD) today from a $4.944 low back in April.
PayPal, a large online payments corporation, recently announced it will be launching its own cryptocurrency services, fostering support for the highly volatile digital currency.
S&S reported on Square Inc. investing a massive amount of money into BTC earlier this month.
What’s perhaps the most interesting is the chartered path of BTC )since inception) compared with gold in the late 1900’s:
With debt likely reaching record-levels in going into 2021, BTC may be a safe bet in terms of hedging against any potential inflation as a result.
Furthermore, the use of a digital currency made more available with Coinbase and PayPal helps smooth the transition.
BTC is also the only large tradeable asset in the world that has a known fixed maximum supply. By its design, the total quantity of Bitcoins (including those not yet mined) cannot exceed 21 million.
Approximately 18.5 million Bitcoins have already been mined, leaving about 10% remaining. On May 12th Bitcoin’s mining reward – the pace at which the supply of Bitcoin is increased – will for the third time be “halved” (falling from 12.5 to 6.25 Bitcoins per block of transactions added to the blockchain). Future halving’s will likely occur approximately every four years consistent with Bitcoin’s design, continuing to slow the rate of supply increase and causing some to estimate that the last available Bitcoin will not be mined for another 100+ years.
This brilliant feature of Bitcoin was designed by the anonymous creator of Bitcoin to protect its integrity by making it increasingly rare and sought after, a concept which counters the current thinking of central banks and governments.
BTC may indeed be here to stay.
Works Cited:
https://www.zerohedge.com/crypto/paul-tudor-jones-says-bitcoin-rally-first-inning-prices-top-13000