Bitcoin boomed better as inflation hedge than real estate and gold: Pomp

Key takeaways:

  • Gold yields to Bitcoin as a better inflation hedge, says Anthony Pompliano
  • Bitcoin high returns and performance compared to gold and real estate.

YEREVAN (CoinChapter.com) – Bitcoin (BTC) gained 247 percent in the last 12 months, while gold lost 10 percent in the same period. Thus, the ‘digital gold’ is a better inflation hedge than the precious metal or real estate, concluded Anthony Pompliano, the co-founder of Morgan Creek Digital hedge fund and an outspoken crypto supporter.

In his daily ‘Pomp Letter,’ the executive discussed the phenomenon of inflation and traders’ behavior in a critical situation.

The official June CPI number was 5.4%, which is the highest in 13 years, and the core inflation number was 4.5%, which is the highest in 30 years.

stated Mr. Pompliano

He also pointed out that the actual inflation is less relevant than the fear of inflation itself.

The fear of inflation is enough to make traders relocate assets into hedging assets that they see as alternatives to cash and bonds. Historically, real estate and gold acted as the perfect hedges to secure capital against rising inflation levels. However, the landscape changed as Bitcoin stepped onto the stage.

The ‘digital gold’ surpassed its rivals in returns. The Pomp believes Bitcoin to be the paradigm-shifting asset and presents data to back his idea.

Also read: Delta variant bullish for Bitcoin and gold says Bloomberg strategist.

Bitcoin performance vs. gold and real estate

Mr. Pompliano offered a graph of real estate prices over twenty years. The 150 percent rise since 2000, however, wasn’t enough to constitute competition for Bitcoin.

House price index growth since 2000. Source: US Federal Housing Finance Agency
House price index growth since 2000. Source: US Federal Housing Finance Agency

Gold also hung out the white flag, as it lost 10 percent in the past year. However, it is noteworthy that Bitcoin’s 247 percent gain comes higher volatility than the historical haven has ever seen.

Also read: Central banks snub Bitcoin, rake in gold as inflation fears hit exchequers.

Bitcoin returns versus traditional assets' returns. Source: Anthony Pompliano
Bitcoin returns versus traditional assets’ returns. Source: Anthony Pompliano

Fears of the delta variant of the Covid-19 have also boosted possibilities that the Federal Reserve might extend its stimulus program. That would mean a continuous period of near-zero interest rates and $120bn a month asset purchase. That could shift investors further into the safety of higher-yielding havens.

Mr. Pompliano believes that Bitcoin is the clear winner of the race. However, in his daily letter, the executive also pinpoints the demographic contrast between the gold ‘audience’ and the crypto supporters.

Investors under 35 prefer to expose their portfolios to the crypto sector instead of using gold as a hedge. Older traders prefer more conventional channels to secure their capital.

Also read: Bullish cues for Bitcoin as central banks up gold buying on inflation fears.

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