Gold used to be the best financial asset to hedge against inflation until the rise of bitcoin. Big global financial institutions add gold as a part of their investment portfolio, taking into consideration the relatively stable nature of the precious metal.
However, not until bitcoin’s unimaginable rise in 2021, following June 2020, halving, did gold surprisingly relinquish its enviable position as a great asset amongst the millennials.
According to a report by Helen Partz of Cointelegraph, gold disappointed investors in 2021 as a traditional hedge against inflation, seeing its worst year since 2015.
Despite the numerous challenges that they faced in the recently concluded 2021, cryptocurrency, particularly bitcoin, succeeded in creating more millionaires and million-dollar businesses.
Professor Jeremy Siegel attributed the love for bitcoin by millennials to its ability to hedge against inflation.
According to him, “Bitcoin (BTC), the world’s most-valued cryptocurrency, has replaced gold as an inflation hedge for young investors.”
He was, however, unimpressed with how “gold” had performed this past year, attributing this failure to its inability to protect investors’ financial wealth against loss that comes from inflationary pressure.
In response, Siegel argued, “Let’s face the fact: I think Bitcoin as an inflation hedge in the minds of many younger investors has replaced gold.” Digital coins are the new gold for Millennials. I think that the story of gold is a fact that the younger generation regards Bitcoin as a substitute “
Siegel also recalled that older generations witnessed how gold soared during the inflation of the 1970s. “This time, it is not in our favor,” he added.
Gold, which traditionally emerged as an asset class providing a hedge against inflation, failed to meet investors’ expectations in 2021, recording its worst year since 2015 and dropping around 5% to close the year at $1,800. despite massive price fluctuations over the course of 2021.
Our in-house finance analyst believes that bitcoin will continue to gather momentum and attention as one of the best assets to hedge against inflation.
He took a critical examination of the Nigerian economy, especially the fallen Naira, and believed that regardless of the regulatory challenges it faces, Bitcoin and other altcoin millennials’ will still be the focus to protect millennials’ investments.