Jurrien Timmer, Head of Global Macro at Fidelity, wrote in a post on X on Wednesday that Bitcoin is a store of value currency and that its inflation hedge can be compared to “gold on steroids.”
The analyst argues that both Bitcoin and gold have distinct risk/reward ratios but are attractive at the current time, and both can be players on the same “team” in terms of investment thesis.
As Timmer pointed out, Bitcoin has started to rise again this year following the “historical pattern of previous booms and busts.”
The asset has rebounded to $35,000 on Wednesday, with market participants celebrating the potential approval of a Bitcoin ETF spot within the next two months. It is also seen as rising as a “quality flight” for investors as they lose confidence in traditional financial instruments, pushing its price on par with gold.
Timmer explains:
“In history, in regimes characterized by high inflation, negative real interest rates and/or excessive money supply growth, gold tends to shine and gain market share relative to GDP.”
Investors often compare Bitcoin to gold due to its strong monetary properties, including its reliable scarcity compared to fiat currencies. Some, like Michael Saylor, see Bitcoin as an even better alternative due to its digital benefits and early-stage adoption.
While Bitcoin is still much more volatile than gold, Timmer notes that this plays to its advantage in a rising market. When comparing BTC’s risk/reward to other asset classes since 2020, he says that the digital currency is “in a league of its own.”
He says:
“True, Bitcoin is down 54% from its two-year high, but it’s also up 84% from its low. Government bonds can’t keep up with that risk-reward calculus, and many other assets can’t, at least not at this time.”
Fidelity has operated a digital asset unit supporting cryptocurrencies as an investable asset class for several years, providing custody and trading services for Bitcoin and Ethereum.
The asset management firm is actively working with regulatory agencies on its Bitcoin ETF spot application—a planned investment product expected to attract billions of dollars of institutional capital into Bitcoin. BlackRock is currently competing with Fidelity to secure SEC approval, which analysts believe could happen in early January.