In the current macro backdrop, both bitcoin and gold have recorded an increase in their prices.
Talking about the hedge against the inflation which he sees coming from central bank money-printing, he bets on gold and treasuries with a “growing role for Bitcoin.”
American billionaire hedge fund manager Paul Singer in his April investor also said the fair value of gold in the current macroeconomic environment is “literally multiples of its current price” and “one of the most undervalued investable assets existing today.”
Recently, gold’s market cap breached the $11 trillion mark.
gold market cap now $11 trillion
— Silver Watchdog (@Silver_Watchdog) May 15, 2020
In the coming years, the market size for non-sovereign stores of value is expected to expand dramatically which spells good for bitcoin as well.
Recently, Bitcoin underwent its third halving, which reduced its annual issuance rate at 1.8% to parity with gold. And this has been while the top four central banks alone printed a combined $4.1 trillion over the past three months to fight off the effects of Covid-19.
“There are few opportunities with as much asymmetric upside as Bitcoin if it were to become successful,” noted Messari in its latest report.
Bitcoin with its sovereignty, secular tailwinds, and upside is an attractive option however, it has a long way ahead as to reach gold’s current market cap, the digital currency needs to rise 63x from its current levels.
New banks are what matters more?
In the first quarter of 2020, central banks have been printing money relentlessly and slashed the rates to zero.
The lower rates affected the banks which eat into their interest margins as such various financial stocks are sitting at near YTD lows.
If we look at the traditional old banks, the likes of Goldman Sachs ($59 bln), Citigroup ($87 bln), and Western Union ($7.5 bln) are at their 3 to 5 years low while Wells Fargo at $95 bln market cap is at its 10 year low.
Even Warren Buffet has been selling his banks’ stocks including that of Goldman Sachs, JPMorgan Chase, U.S. Bancorp, Bank of New York Mellon, Wells Fargo, and Bank of America.
Bitcoin meanwhile with a market cap of $170 bln is up 25% YTD but still down 54% from its ATH in 2017.
“Maybe banks make the old economy worse, and FinTech (including digital assets) makes it better?” said Jeff Dorman, CIO at Arca.
But not just bitcoin, new finance companies like Paypal, Stripe, Square, and even stablecoins are making new highs or are near their peaks. As analyst and investor Howard Lindzon said,
“People say markets can’t move higher without the financials (banks) but maybe the new ‘banks’ are what matter more.”