What is to protect the investment portfolio from potential stock market fluctuations? According to Bloomberg’s Mike Magron, the merger risk of Bitcoin (Bitcoin), gold and government bonds.
Senior commodity strategist, he saw BTC rises to 100,000 USD, In a pitted derivative New report Representing the performance of the three safe-haven assets and the Standard & Poor’s 500 Index, it was found that these three have consistently outperformed the benchmark Wall Street Index since at least the beginning of 2020.
The Bitcoin-Gold-Bonds index obtains data from Grayscale Bitcoin Trust (GBTC), SPDR Gold Shares (GLD) and iShares 20+ T-Bond ETF (TLT). These three funds enable investors to gain market exposure without having to hold/own physical assets.
Bitcoin is more profitable than gold and bonds
Magron noted that Bitcoin has done some significant work in making investors’ risk aversion strategies successful, adding that even if they are still exposed to gold and bonds, their portfolio “appears without a flagship cryptocurrency. More and more naked”.
The statement is based on the comparison between the yields of Bitcoin, gold and 10-year U.S. Treasury bonds Rising quantitative easing And the ratio of debt to GDP. Since March 2020, Bitcoin has risen by nearly 1,190%, far better than the 25.93% surge of spot gold.
At the same time, the U.S. 10-year bond yield jumped from a historical low of 0.33% over the same period to 1.326%.
However, despite the healthy surge, returns on benchmark government bonds have fallen below U.S. core inflation rate is 5.4%This indicates that investors who hold bonds as a safe-haven asset for risky stocks are suffering from inflation-adjusted losses.
Therefore, the lower rate of return Companies borrow at a meager interest rate Expansion, thereby boosting the stock market. In addition, investors in the secondary market have begun to transfer their funds to non-income assets such as Bitcoin and gold, hoping to obtain higher returns.
Yields rebound early?
Former bond investor Bill Gross built Pimco into a US$2 trillion asset management company. famous Bond yields are “no way to go.”
The retired fund manager said that in the next 12 months, the 10-year US Treasury bond yield will rise to 2%. As a result, bond prices will fall due to their negative correlation with yields, resulting in a loss of approximately 3% for investors who bought bonds between 2020 and 2021.
U.S. Federal Reserve Purchased 60% of the net issued bonds of the U.S. government In the past year, a monthly asset purchase plan of $120 billion was used to boost the U.S. economy. However, the U.S. Central Bank announced in August that, given its 2% inflation rate target and prospects for economic growth, it would slow down its bond purchases before the end of this year.
“So, how willing is the private market to absorb 60% of the future in mid-2022 and beyond,” Gross questioned, adding that the U.S. bond market will become “investment junk.”
“Mid- and long-term bond funds must be in that trash can.”
Rising interest rates may lead to capital withdrawal Overvalued U.S. stocksAt the same time, as a safe-haven transaction, funds may also begin to flow into the Bitcoin market.Julian Emanuel, chief equity and derivatives strategist at the brokerage firm BTIG, clarified the same problem In an interview with CNBC In February. extract:
“This is the environment in which catch-up trade will show its capabilities […] You come from such a low level of absolute interest rates that higher interest rates may actually support alternatives such as Bitcoin. “
For McGlone, funds flowing into Bitcoin and other cryptocurrency markets (including Ethereum) will be the next best investment opportunity. He stated that digital assets may represent “higher beta potential”, adding:
“We see that the Bitcoin price of Ethereum is expected to reach $5,000 and $100,000.”
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