The Conversation (0)
Driving this young investor group to bitcoin are many of the same factors that pushed their parents and grandparents to the yellow metal.
Of the new commodities and assets drawing in Millennial investors, bitcoin reigns supreme. Making a triple digit percentage gain over the last year, some believe the cryptocurrency is primed to rival gold as the safe haven of choice over the next decade.
Driving this young investor group to bitcoin are many of the same factors that pushed previous generations to the yellow metal: economic uncertainty, inflation concerns and the ability to store value.
COVID-19 volatility has been a catalyst for both assets, with both bitcoin and gold recording fresh all-time highs over the past year.
Bitcoin’s performance during the last 12 months has drawn comparisons to gold’s activity in the 1970s — similarities that John Wu, president of financial technology company Ava Labs, acknowledged.
“With one caveat — inflation really picked up in the 70s; now it’s the fear that inflation will pick up,” he said in a conversation with the Investing News Network.
“The Fed’s balance sheet is over US$7 trillion,” Wu continued. “We were trying to taper it back down when unfortunately COVID hit and the Fed had to inject even more money into the system. So between that and the fiscal stimulus, there’s quite a fear that we will get some sort of shock in the system that we haven’t seen for quite a long time.”
This uncertainty propelled gold to US$2,063 per ounce in August 2020. Ongoing volatility continues to add tailwinds to bitcoin, which topped US$57,500 in late February.
With the market cap for the cryptocurrency hovering near the US$1 trillion mark, Wu expects to see continued growth in the space well into the next decade. What’s more, bitcoin’s similarities to gold may be enough to entice a more seasoned investor class.
At the same time, attributes that are said to make bitcoin superior to gold will likely draw in tech-savvy investors. These include bitcoin’s easy portability, decentralization and fungibility.
“I think to a lot of younger people who now trust gold, but also trust the digital form of it, they do believe that (bitcoin) is a better way to store value,” said Wu.
“There’s about US$70 trillion of wealth in the next 15 years that’ll be handed down from basically the Boomers and the Gen X’ers to the new Millennials, and these Millennials, who grew up in the internet era, doing everything digital, they have a lot of trust in math and code. And I think they believe this is the new digital gold,” he concluded.
Watch the interview above to hear more from Wu about how bitcoin will rival and gold.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.