Is Bitcoin an Inflation Hedge? Professional Investors Think So

While the price of Bitcoin has mostly fluctuated between $35,000 and $45,000 this year, lagging the correlation with gold, Nickel Digital Asset Management’s latest survey of institutional investors show this may soon change.

Nickel surveyed managers who control roughly $110 billion in assets. The survey showed most of these big players now see Bitcoin as a “store of value” asset. Meaning an asset that stores value without depreciation.

In a press release issued by Nickel, regarding its survey, they say “Three in four professional investors (73%) believe that because there are a finite number of Bitcoins, the cryptocurrency is a viable asset to hedge against rising inflation.”

Further bullish news for Bitcoin shows 78% of those survey respondents say, that because of Bitcoin’s unique supply situation, more institutional investors and allocations could come into the mix. Should this happen, additional buying pressure on Bitcoin could push its price well above its current trading range.

As opposed to central banks, who have been increasing the money supply, Bitcoin cannot be “printed” or quantitatively eased. In fact, as global central banks continue to increase the money supply (inflation) it costs more US dollars to purchase a single Bitcoin, which are expected to be mined out by 2140.

The hard limit supply of Bitcoin is 21 million coins. Every four years or so, the supply expansion is cut by 50%, a phenomenon known as halving. Because of halving, and a continually lowering supply of unmined coins, the asset is gaining a lot more attention.

Regarding Bitcoin’s current “risk-on” behavior, akin to high beta tech stocks, Anatoly Crachilov, CEO of Nickel said, “…This does not undermine bitcoin’s ability to provide a long-term hedge against inflation term thanks to its immutable, finite supply and credible neutrality, i.e., independence from any single country’s monetary policy.”

Bitcoin, as compared to the more well-known inflation-hedge, gold, could show another big run-up in price, soon.

In August of 2020, gold hit a record high. Four months later, Bitcoin followed suit.

Right now, amid growing tensions in Europe, gold is trading near new all-time highs. Should Bitcoin follow suit, once again, a single coin could trade over $70.000 by summertime.

Split Capital’s Caheer Ebitakar tweeted, “The higher gold goes, the more likely BTC starts getting that correlation going again… But buying gold is actually the worst.”

Read more about Bitcoin as an inflation hedge, HERE.