Coinbase CEO Brian Armstrong predicted that Bitcoin would become a “rescue” asset (flight-to-safety asset) in the event of a problem within the next five or ten years.
In a podcast episode Around the Block from Coinbase, titled “The State of Crypto and Where It’s Headed with Pomp,” he said, however, that the market capitalization of the flagship cryptocurrency was not yet large enough to have this kind of function.
However, this could change in the next five or ten years, when the crypto-economy grows to become “a sufficiently large percentage of the global economy”. Only after that Bitcoin could be considered digital gold because that is what people are looking for when something goes wrong.
“I think we’ll see that change probably over time. I can see in the next five or ten years, when the crypto-economy becomes a bigger percentage of global GDP, people will run away and turn back to bitcoin like a kind of “new gold” if you can say so, but we’re not there yet,” said the billionaire.
Brian Armstrong noted that he overestimated the chances of Bitcoin serving as an inflation hedge in the current macro environment. “I thought it might actually bring more attention to Bitcoin in this type of environment, but it seems like it’s a bit too soon,” he said.
Bitcoin fails to act as an inflation hedge
Bitcoin has managed to gain more and more value in 2021, as inflation began to pick up steam. Even some top banks and investors have floated the theory that BTC acts as a hedge against inflation.
For example, Paul Tudor Jones, an American billionaire hedge fund manager, said to CNBC in mid-October 2021 thathe viewed Bitcoin as a better hedge against inflation than gold. “That would be my preference over gold at the moment. Clearly there is a place for crypto. Clearly it is winning the race against gold right now” , did he declare.
Similarly, JPMorgan strategists said at the end of October last year that inflation concerns were behind Bitcoin’s rise. “We believe that the perception of bitcoin as a better inflation hedge than gold is the main reason for the current rally, which has triggered a move away from gold ETFs to bitcoin funds since September,” they said. they stated.
BTC failed to maintain its upward trend in 2022 despite record inflation figures. Instead, the Bitcoin Extended Its Losses as More Central Banks Started Raising Rates in an Aim to Tame Inflation.
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