Bitcoin is breaking out to the upside… Is it still timely for new investments?
Cryptocurrency is an appropriate currency hedge and a good supplement to precious metals and other strategies as diversifiers for your portfolio.
Cryptocurrencies have gotten a lot of attention recently in the investment community. The cryptos’ have had a nice run up in price and are looked at by many as being a solid hedge against dollar weakness or inflation. Stanley Druckenmiller was recently on CNBC talking about his Bitcoin position, and said that “if the gold bet works then the bitcoin bet would probably work better because it is thinner and more illiquid”. My presumption is that he is talking about a scenario where inflation returns with a vengeance as a result of the COVID stimulus programs.
Citibank’s Tom Fitzpatrick recently said that crypto’s exponential move followed by a massive correction reminds him of the 1970 gold market, when that metal finally broke free from 50 years of being pegged in the $20-$35 per ounce range. Extrapolating that analysis out, he sees Bitcoin going to as high as $318K by the end of next year. (Seeking Alpha News 11/16/2020) Keep in mind that any of these professionals that own Bitcoin bought lower and that if they are willing to talk about it now they probably would like to sell some of theirs to you at current levels.
