Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
The SkyBridge Capital chief believes that Bitcoin needs to have at least one billion addresses in order to gain maturity and function as an asset class.
Over the last decade, many have been expecting Bitcoin to work as an inflation hedge and a natural replacement for physical gold. However, Bitcoin is far from attaining its hedge status while exhibiting massive volatility.
Can Bitcoin Be an Inflation Hedge?
Instead of gold, Bitcoin has been showing a greater correlation to the US equity market. SkyBridge Capital’s Anthony Scaramucci says that it will still take time for Bitcoin to mature as a hedge against inflation. He said that the Bitcoin wallet bandwidth is still too low at 300 million.
During his interview with CNBC on Monday, August 22, Scaramucci said that Bitcoin needs to have one billion addresses to emerge as an inflation hedge. The SkyBridge Capital chief said:
“#Bitcoin is still not a mature enough asset to be regarded as a potential inflation hedge. You just don’t have the wallet bandwidth with Bitcoin. It’s still an early adopting technical asset.”
However, Scaramucci acknowledged that there’s enough progress made on the way. He noted that he first started to invest, the total Bitcoin addresses were only 80 million. This has jumped four-fold in the last few years.
Furthermore, the SkyBridge Capital chief also spoke about the participation of big financial giants like BlackRock. Earlier this month, the world’s largest asset manager entered into a partnership with crypto exchange Coinbase. The partnership aims at offering BlackRock’s institutional clients exposure to Bitcoin (BTC).
Anthony Scaramucci said that BlackRock’s entry into the crypto space is enough to tell the growing demand for the asset. As such, the institutional interest in Bitcoin has been picking up strong off lately. Even some of the big corporations like Tesla have considered adding Bitcoins to their balance sheet.
Bitcoin vs Gold
Over the last decade, there have been several debates that Bitcoin could be replacing Gold as an asset class. However, BTC is currently only 5% of Gold’s total market cap of more than $10 trillion.
During his interview last November, Scaramucci said that it won’t be easy enough to rump Gold considering its 5,500-year history of being a strong inflation hedge. However, he believes that Bitcoin’s technical properties are superior to that of Gold. BTC’s scarcity and easy transferability work in favor of the asset class.
Despite the Gold macro uncertainty and rising inflation, the Gold price hasn’t quite moved. It will be interesting to see how the asset class performs in case the developed economies are hit by a recession.