Over the past year, we have heard that bitcoin is a necessary ingredient of a successful portfolio. That so many hedge funds, wealth managers and other individuals and firms in charge of handling customers’ money are working hard to give them access to crypto, and that anywhere between one and three percent should be allocated to bitcoin. However, according to Societe Generale, this is not quite true.
Societe Generale Thinks Gold Is Stronger Than BTC
Whether these firms are working to give customers access to crypto trading has little to do with what is an even bigger problem according to a recent report issued by Societe Generale. The financial firm says that all these individuals and companies are promoting bitcoin like it should be part of every portfolio. Some even allege that it is one of the most important assets a person could garner, but the firm is saying otherwise. Societe Generale says that bitcoin’s place in any portfolio is “highly contested,” and still recommends that traders devote most of their attention to precious metals like gold.
In the report, the company explains:
It comes as no surprise that the place of bitcoin in any investment portfolio remains highly contested, precisely because of its erratic price movements.
Over the past year, bitcoin has incurred the biggest boost of its 12-year existence. The price initially began May of 2020 in the $9,000 range, though by April of this year – 11 months later – the currency jumped into the mid-$60,000 range, adding more than $50,000 to its price. That is a spike of nearly $5,000 per month.
However, as of late, the currency has been trapped in a downward spiral and is now trading for just over $36,000. It has lost close to $30,000 off its price in just the past few weeks, and things are not looking too good at the time of writing.
Two analysts with Societe Generale – Alain Bokobza and Arthur Van Slooten – said in a recent interview that investors should likely follow gold more often than they do BTC. While both assets are similar, they said that gold was a better stabilizer for one’s portfolio and would likely be less volatile.
Fighting Centralized Finance
The only potential reward to investors in bitcoin and gold is from their positive price movement, which is essentially the only thing they have in common, apart from their ability to trigger rush buying… We agreed that investors perceive both as offering protection (or at least alternatives) against official central bank money, the value of which is being undermined by unprecedented monetary and fiscal stimulus.
Inflation has been on the rise for many fiat currencies over the past year given that the coronavirus pandemic has led to job losses and global financial crises. This has caused many governments to overprint fiat as a means of providing stimulus measures to citizens.