Gold – 0, Bitcoin – 1 Is bitcoin the best hedge against quantitative easing?

By Marcie D Terman, COO of The Panxora Group

In an effort to manage the massive issues caused by the global pandemic, governments are printing money hand over fist and will probably need to do so for some time to come. Regardless of stock market behaviour, those with large cash positions are reasonably worried about devaluation.

Past generations facing devaluation turned to gold as a ‘store of value’ but bitcoin with lack of storage charges and relatively small transactional fees is starting to be seen as a viable alternative to gold.

It’s easy to see examples of this behaviour. For instance Microstrategy. (NASDAQ Symbol MSTR) has taken a quarter of a billion dollars in cash and placed it as a hedge into bitcoin.

Also, much attention has been paid to Paul Tudor Jones’ statement earlier in the year about the future of bitcoin.

We may be at the brink of bitcoin moving into the mainstream which could cause a massive uptick in value. This has been made possible by the entry into the market of regulated exchanges as market participants. Also by the unhappy but undeniable acceptance of the currency by governments around the world.

Institutional money is looking for gateways into cryptocurrency ownership that may be denied to them by mandate or convention. Hence the price differential between offerings like Grayscale’s bitcoin trust and the underlying currency. Recently the bitcoin trust has been trading at a 25% premium to the underlying market.

All these factors may be instrumental in causing bitcoin and the other cryptocurrencies that can correlate with its price to rise in value.

An alternative to holding a bitcoin position which can be impacted by substantial drawdowns is to consider an account with Panxora’s Crypto I Hedge Fund. Panxora Crypto I’s quantitative approach has been developed to capture much of cryptocurrency’s upside movement while avoiding downside volatility. To learn more or to sign up to receive monthly reports on its performance visit the Panxora website.

​