The founder and CEO of Vailshare Capital, Dr. Jeff Ross, now argues that the reason people hold and invest in Bitcoin is not because they are diversifying. In a post on X, Ross explained that the goal is because most want to preserve and gradually grow their purchasing power, not spread risks.
Bitcoin Is For Preserving Purchasing Power
The CEO’s perspective directly contradicts the conventional wisdom often held by financial advisors. Most recommend diversification, including into store-of-value assets like gold, as a key strategy to mitigate risk.
On the contrary, Ross asserts that traditional assets like bonds, while offering diversification, can be susceptible to inflation risks, potentially gnawing purchasing power in the long run.
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Ross responded to Robin Crooks, the former Chief FX Strategist at Goldman Sachs, who watered down Bitcoin’s recent rally. According to Crooks, BTC is edging higher because of market adjustments. This shift, buoying BTC and other safe havens, is as the United States Federal Reserve (Fed) prepares to change monetary policy, possibly slashing rates in March.
It is this expectation, Crooks adds, that explains why Bitcoin is rallying. The analyst went against the grain, asserting that the coin is not rallying because it has a “diversification” benefit due to its store of value property. Bitcoin holders often mention the deflationary nature of the coin and how it can protect against the devaluation of traditional assets as an advantage.
Even so, and volatility notwithstanding, Ross opposed Crooks’ preview, pointing out BTC’s historical performance and how it has succeeded in “preserving and growing purchasing power.”
Despite Bitcoin’s stellar performance over the years, critics remain unconvinced, arguing that its volatile nature and lack of intrinsic value make it speculative. To even buttress this take, Crooks, who has been dismissive of Bitcoin in the past, added that the coin is a “bubble.”
Early last year, the former Goldman Sachs analyst said Bitcoin “blows up” when the Fed tightens and has zero “store of value” function.
BTC Uptrends Remain Ahead Of Halving
The world’s most valuable coin has been trending higher since early 2024. One of the reasons why the community is upbeat is because of the United States Securities and Exchange (SEC) approving spot Bitcoin exchange-traded funds (ETFs). Through this product, investors have been doubling down on the asset, lifting bids higher and subsequently driving the coin to new highs.
At the same time, the network will adjust the amount of coins distributed to miners as block rewards from early April. Then, rewards will be halved from 6.25 BTC.
The expected reduction of emissions, as historical performance guides, could spark more gains in the second half of 2024. Halving will likely make Bitcoin an attractive asset as a hedge against inflation, making it an ideal store-of-value asset.
Feature image from Canva, chart from TradingView