Fidelity’s Director Views Bitcoin as “Exponential Gold”
Jurrien Timmer, the director of global macro at financial services giant Fidelity, recently shared his perspective on bitcoin. He believes that bitcoin is a commodity currency that aims to be a store of value and a hedge against monetary debasement. Timmer describes bitcoin as “exponential gold,” comparing it to the precious metal.
Bitcoin as a Store of Value
Timmer explains that historically, gold tends to perform well during periods of high inflation, negative real rates, and excessive money supply growth. However, he argues that gold is too deflationary and impractical for use as a medium of exchange. Therefore, investors primarily hold it as a store of value. This is one reason why bitcoin is often compared to gold.
Bitcoin’s Correlation with Other Assets
Timmer further discusses bitcoin’s correlation with other assets. He notes that while bitcoin still has a positive correlation with equities, it is less correlated compared to many other assets. When considering its place in a portfolio, Timmer suggests that bitcoin should be categorized as an alternative investment (alts). He also points out that bitcoin is negatively correlated with the U.S. dollar and T-bills but surprisingly uncorrelated with gold.
Playing on Different Teams
Timmer concludes by stating that if bitcoin and gold are playing on the same team but in different games, it may not be a bad thing. While their correlation may be uncertain, having more altcoins that are uncorrelated with traditional indices and other altcoins can be beneficial for portfolio diversification.
Hot Take: Bitcoin’s Potential as Exponential Gold
Fidelity’s director of global macro sees great potential in bitcoin as “exponential gold.” While gold is primarily held as a store of value, Timmer believes that bitcoin offers similar characteristics while also serving as a commodity currency and hedge against monetary debasement. Additionally, he highlights bitcoin’s decreasing correlation with equities and its negative correlation with the U.S. dollar and T-bills. Although bitcoin’s correlation with gold remains uncertain, having uncorrelated altcoins can be advantageous for portfolio diversification.
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