Jurrien Timmer said that Bitcoin (BTC) has a place in some portfolios as the popularity of BTC grows
Bitcoin’s popularity in the mainstream financial world is on the rise. An increasing number of financial institutions are encouraging their clients to add Bitcoin to their portfolio. The latest to join this trend is Fidelity Investments.
Fidelity’s Director of Global Macro Jurrien Timmer said that there is a place for Bitcoin in some portfolios. In a research note published last month, Timmer told investors that the cryptocurrency could be emerging as a legitimate hedge against inflation. He believes Bitcoin could be a stable store of value, calling it the ‘digital Gold’.
Timmer believes that Bitcoin has an advantage over Gold. He said, “Bitcoin may have a unique advantage over Gold: Bitcoin supply, by design, is finite. We know that Bitcoin’s supply growth is flattening. Note how the production of Gold has been quite steady throughout the years: No asymptote here”!
The Fidelity director said that the current monetary environment naturally favoured BTC. “With interest rates close to zero–or negative–and central banks printing money like there’s no tomorrow, is it any wonder that Bitcoin seems to be having its day”? he added.
The massive volatility of Bitcoin is one of the key reasons why many people stay away from it and why some financial advisors don’t recommend it. However, Timmer said its volatility meant that Bitcoin may not be a prudent investment choice for many people, but it could find a home in certain portfolios. For investors who are willing to invest in Bitcoin, the question is no longer whether they should invest but rather how much they should invest.
JPMorgan analysts believe that Bitcoin’s growth is coming at the expense of Gold, and the cryptocurrency is taking some of the precious metal’s market share. Timmer expects this trend to continue, stating that Bitcoin will take more market share from Gold over time.
Timmer is optimistic about Bitcoin’s price in the short-term and long-term. According to the Bitcoin Stock-to-Flow (S2F) pricing model he built, Timmer predicts Bitcoin’s price to surge past $400,000 by 2025. “The model predicted the price of one Bitcoin at $24k this year (done!) and $463k in 2025. One can see why Bitcoiners are so excited”, he said.
BTC had struggled last week but seemed to be slowly recovering as its price touched the $50k mark a few hours ago.