Deutsche Bank Says Investors Increasingly Prefer Bitcoin Over Gold as Inflation Hedge

The Deutsche Bank analyst's comments are another sign of bitcoin's increasing acceptance in the mainstream of finance.

Nov 19, 2020 at 9:20 a.m. UTC
Updated Sep 14, 2021 at 10:32 a.m. UTC

Bitcoin's appeal as an alternative store of value asset is strengthening, according to analysts at Germany-based investment bank Deutsche Bank.

"There seems to be an increasing demand to use bitcoin where gold used to be used to hedge dollar risk, inflation, and other things," Jim Reid, managing director, head of global fundamental credit strategy, said, according to ZeroHedge.

Bitcoin has long been considered by supporters as digital gold due to its limited, predictable supply and use case as a store of value outside banking influence.

While bitcoin has gained 144% this year, gold is up 22%. Both assets seem to have benefitted from the inflation-boosting monetary and fiscal policies launched by central banks and governments across the globe to contain the economic fallout from the coronavirus pandemic.

The cryptocurrency has rallied over 25% this month alone despite hopes for a swift global economic recovery on potential coronavirus vaccines and improved risk appetite in stock markets. Gold, however, has lived up to its reputation as a haven asset by falling 1% so far this month.

The divergence between gold and silver on the one hand, and bitcoin on the other, is one of the oddities of this month, according to Reid. U.S.-based drug makers Pfizer (PFE) and Moderna (MRNA) announced encouraging results for their experimental coronavirus vaccines earlier this month, triggering a rotation of money out of gold and other haven assets and into risk assets.

Reid told Bloomberg earlier this month that coronavirus vaccines are equivalent to global fiscal stimulus. Christian Nolting, global chief investment officer at Deutsche Bank Wealth Management, said inflation could rise moderately in 2021 and 2022, boding well for stocks and gold.

At press time, bitcoin is trading near $17,550, while gold is changing hands at $1,860 per ounce.

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