HomeBitcoin acts as an inflationary hedge for both retail and institutional investors: Kraken’s Chou

Bitcoin acts as an inflationary hedge for both retail and institutional investors: Kraken’s Chou

Harshini Nag

Even Apple CEO Tim Cook has invested in Bitcoin to protect his assets against inflation

Cryptocurrency exchange and bank Kraken’s Head of OTC Options Trading Juthica Chou stated that as a fundamentally new asset class, Bitcoin acts as a hedge against the pandemic-induced inflation. The comments by the executive come amid Bitcoin surging to as high as $68744 earlier today. The cryptocurrency has since dropped by about 5% and is currently trading at $65,026.

In a segment of Bloomberg’s ‘Quicktake Stock’, crypto analyst Vildana Hajric stated that Bitcoin’s stellar performance in the last few days was predictable. She pointed out that investors who believed that recovery from the pandemic would cause higher inflation are hoarding the cryptocurrency as a hedge.

However, whether the argument of Bitcoin being an inflationary hedge is valid cannot be sufficiently addressed because of the lack of historic data on the asset’s performance, Hajric explained.

In response to Hajric’s remarks, Chou was asked if Bitcoin’s position as a hedge against inflation appeals to Kraken’s institutional investors. The executive responded in the affirmative, highlighting that cryptocurrency was part of a number of institutional investors’ portfolio diversification strategies.

Chou also pointed out that even Apple CEO Tim Cook confirmed that he was holding the digital asset for inflationary reasons. This is an indication of an upcoming trend of increasing interest among both retail and institutional investors in Bitcoin in order to protect their assets from the effects of inflation, she added.

When asked if retail investors who are yet to invest in Bitcoin have missed the bus, Chou stated that it was not too late to enter the Bitcoin market: 

“If you really have the kind of view of the world in terms of what is possible with global Bitcoin adoption, the market is very sizeable.”

However, with that being said, individuals must understand the volatility that inherently comes with the cryptocurrency market, Chou said, adding that investors should consider their risk appetite before allotting funds to Bitcoin in their portfolio.   

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