- Lately, Bitcoin (BTC) has been gaining increasing support from traditional financial institutions as a hedge against inflation and an investment opportunity.
- In a note, the firm emphasized that Bitcoin’s unique features place it in the same category as gold and are seen as reliable protection against inflation.
- Jefferies stated that investors are largely ignoring concerns of a recession in the United States, even though economic indicators continue to signal an impending downturn.
Jefferies, a leading global investment firm, evaluated how Bitcoin could provide resilience against inflation in its recent report.
Jefferies Believes Bitcoin Should Be in the Same Basket as Gold
Recently, Bitcoin (BTC) has been receiving growing support from traditional financial institutions as a hedge against inflation and an investment opportunity. This support has emerged at a time when Bitcoin is making efforts to ignite the next bull market.
In line with this trend, Jefferies, a leading global investment firm, has become the latest organization to endorse Bitcoin as a “critical protection” against potential monetary policies that could devalue fiat currencies and reignite inflation.
In a note sent to investors on Wednesday, October 4, Jefferies stated that Bitcoin’s unique features place it in the same category as gold and are seen as reliable protection against inflation.
Christopher Wood, the Global Head of Equity Strategy at Jefferies, noted that major G7 central banks, especially the Federal Reserve, might be in the process of smoothly exiting their unconventional monetary policies. Wood emphasized that the inability to smoothly exit these monetary policies could lead to a decline in the value of the U.S. dollar, benefiting both gold and Bitcoin holders.
“The inability to smoothly exit unconventional monetary policy will likely lead to a U.S. dollar collapse, benefiting both gold and Bitcoin holders.”
Ignoring Recession Concerns
While highlighting the potential significance of Bitcoin as protection against inflation, Jefferies noted that investors are largely ignoring concerns of a recession in the United States, even though economic indicators continue to signal an impending downturn.
Furthermore, they pointed out that efforts to tighten monetary conditions during this economic cycle could experience longer delays due to the significant expansion of money supply since 2020. Therefore, Jefferies recommended that investors view Bitcoin and gold investments as insurance rather than short-term trades.
Jefferies suggested a 10% allocation of Bitcoin in U.S. dollar-denominated portfolios for long-term global investors, including retirement funds. The firm has included Bitcoin in its global portfolio alongside physical gold, unhedged gold mining equities, and Asian equities in recent years.
“We share the view that Bitcoin has now evolved into an investable asset class for institutions, given the regulatory arrangements available for digital assets and, therefore, represents an alternative store of value to gold,” explained Jefferies.
Assessing Bitcoin as protection against inflation represents a significant milestone for Bitcoin. It reflects the growing acceptance of Bitcoin as an asset class and store of value, particularly during times of economic uncertainty and evolving monetary policies. Currently, the market is awaiting the announcement of potential products that could influence traditional institutions’ entry into the crypto market, with spot Bitcoin Exchange Traded Fund (ETF) approval being highly anticipated.
