Should ASX investors own Bitcoin (CRYPTO:BTC) as a defensive investment?

The Bitcoin price, still near record highs, remains notoriously volatile. Should ASX investors embrace it as a defensive asset?
The post Should ASX investors own Bitcoin (CRYPTO:BTC) as a defensive investment? appeared first on The Motley Fool Australia. –

hit to asx shares represented by two fists being pushed forward

The Bitcoin (CRYPTO: BTC) price stands at US$55,900 (AU$72,600) at the time of writing. That’s up 3.3% over the past 24 hours. However, the Bitcoin price is still down 8.7% from its all-time highs of just over US$61,520, which it reached this past Sunday.

If you’re familiar with cryptocurrencies at all, you’ll know they have a notorious history of volatility. According to data from CoinDesk, just last year you could have bought one Bitcoin for US$5,700. If you’d held onto it, you’d be sitting on a gain of 880% today.

But price swings run in the other direction too

Sticking to just the past 30 days, Bitcoin was trading for US$57,960 on 22 February. By 1 March, the price had tumbled to US$43,500. In other words, the Bitcoin price tanked 25% in only one week.

So why are more institutional investors turning to Bitcoin as a defensive asset?

Why more institutional investors are banking on Bitcoin

Governments in developed nations are spending trillions of dollars in fiscal stimulus measures to counter the economic impacts of the pandemic. And central banks are ramping up their quantitative easing (QE) programs and holding interest rates near zero. As such, many investors fear that rising inflation may be just around the corner. Indeed, US Government 10-year Treasury notes are yielding just over 1.6% today, the highest since before COVID struck.

Now, according to a survey conducted by JPMorgan, an increasing number of professional investors are turning to Bitcoin over more traditional assets like gold and inflation-linked bonds to hedge against inflation.

As reported by The Australian Financial Review on Monday:

According to a JPMorgan institutional investor survey of 174 asset managers, owners, and hedge funds responsible for more than $US15 trillion in assets, 29 per cent responded they’re positive on digital assets in that they may replace fiat money in the future. Forty-four per cent were neutral and 14 per cent negative.

Of the respondents, 26% cited the “debasement of fiat currencies as the most compelling reason to invest in Bitcoin, versus 13% of investment managers”. Increasing market dept, with more financial institutions turning to cryptocurrencies like Bitcoin was cited by another 27%.

The JPMorgan survey also revealed that 54% of the professionals who are invested in digital tokens “have an allocation less than 1 per cent, with 32 per cent having an allocation between 1 to 5 per cent; 79 per cent of all professionals declared the allocations unhedged.”

So as an ASX investor, should you invest in Bitcoin as a defensive asset against the spectre of rising inflation?

That, dear investor, is a decision you’ll need to make for yourself.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Bitcoin. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Should ASX investors own Bitcoin (CRYPTO:BTC) as a defensive investment? appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!