Bitcoin (BTC), the world’s most valuable cryptocurrency, has replaced gold as an inflation hedge for younger investors, according to Wharton finance professor.
Wharton School Finance Professor Jeremy Siegelin an interview with CNBC Squawk Box on Friday.
On the other hand, BTC is increasingly emerging as an inflation hedge among younger investors, argues Siegel:
Let’s face it, I think Bitcoin as an inflation hedge in the minds of many young investors has replaced gold. Digital currency is the new gold for Millennials. I think the gold story is a fact that the younger generation is seeing Bitcoin as a substitute.
Siegel also reminded that older generations saw how gold skyrocketed during the inflationary era of the 1970s. “This time, it didn’t work,” he added.
Gold, which has traditionally emerged as an asset class that provides an inflation hedge, fell short of investors’ expectations in 2021, recording its worst year since 2015 and falling about 5% to close the year at $1,800. Despite massive price fluctuations throughout 2021, BTC was up around 70% by the end of 2021.
Several prominent global investors have favored BTC versus gold in 2021, with Dallas Mavericks owner Mark Cuban arguing that Bitcoin is “better than gold” by October 2021. Co-founder The founder of Starwood Capital Group, Barry Sternlicht also said that gold is really “worthless” and that he is holding BTC because every government prints huge amounts of money.
But despite BTC becoming an increasingly popular asset compared to gold, many financial and crypto experts believe it has yet to prove inflation-hedging.