Blufford Putnam, chief economist and CEO of CME Group, recently admitted that Bitcoin is competing with gold as a hedge against inflation.

“It looks like gold has a new competitor – Bitcoin,” Bloomberg said in a video posted on YouTube on Tuesday. He said, “Given the current range of gold prices, it is likely that the increase in production will be typical for 2021.”

The supply of gold is less specific than the supply of Bitcoin. Integrated into the asset token, BTC announces a specified cap of 21 million coins to be distributed in circulation according to a stable mining plan. Putnam mentioned this Bitcoin property in his justification, although he also noted the unstable nature of the coin. “Remember, steady supply doesn’t mean less volatility,” he explained. “It might actually mean the opposite,” he said, adding:

When supply is relatively inelastic, the dynamics of demand patterns can have a very large and dramatic effect on prices. Bitcoin explained this point. ”
A value store or hedge is often a place of long-term valuation as a potential hedge against inflation and changing global economic factors. As Investopedia notes, lack of correlation can be a major aspect of campus values.

“We have also noted that gold may lose its appeal as a shield against global political risks,” Putnam said. “Between 2017 and 2020, it seems that the rise and fall of gold prices are more directly related to changes in the Fed’s policy than anything else.” “When stocks interact with the same driving force, the gold-to-equity ratio tends to be more correlated, which weakens gold’s appeal as a safe haven.”

Gold and Bitcoin both broke previous highs in 2020. Gold broke the record in July and surpassed $ 2,000 an ounce in August, according to Bitcoin reached its highest level in December and doubled in the next few weeks.

Speakers often claim that Bitcoin is similar to digital gold, but with features that make it easy to store and transfer. The industry leaders are known to unlike the two savings.

Source: CoinTelegraph