Jeff Curry, global head of commodity research at Goldman Sachs, has dismissed the comparison between bitcoin and gold as a hedge against inflation, equating BTC to a “risk-on” asset like copper.
Speaking on CNBC’s Squawk Box Europe on June 1, Curry said that both copper and bitcoin serve as “risk-off assets” for hedging due to their volatility, while gold is considered a more stable “risk-off”. The defense describes it as:
“Digital currencies are not a substitute for gold. If anything, they will be a substitute for copper, they are pro-risk, risk-at-risk assets. They are a substitute for risk-on inflation hedge not inflation hedge risk”
“You look at the correlation between bitcoin and copper, or a measure of risk appetite and bitcoin, and we’ve got a 10-year trading history on bitcoin – it’s definitely a risk asset,” he said. .
Curry’s comments come after Recent crypto recession, who has seen bitcoin price drop According to CoinGecko, it has fallen by 36.8% in a matter of weeks, from around $57,000 on May 12 to nearly $36,000 today.
Ethereum has taken a similar hit, dropping by 39.58%, rising from around $4,300 on May 12 to around $2,598.
Copper has seen a lot of volatility in 2021. Its price was $3.56 on 3 January and rose to 4.30 by 24 February. The price then fluctuated from $3.50 to $4.00 from March until it reached $4.80 on May 10. The price now sits at $4.65.
Curry stated that “there is good inflation and there is bad inflation,” against which various assets hedge, and explained that, “good inflation is when demand pulls it up,” adding that bitcoin, copper and oil are similar. There are hedges against inflation. However:
“Gold prevents bad inflation, where supply is being cut, which… focuses on shortages of chips, commodities and other types of input raw materials. And you might want to use gold as that hedge. “
The boss of Goldman Sachs had previously argued in an April note that bitcoin could not yet be viewed as digital gold, as its “store-of-value demand could replace another, better-designed cryptocurrency”. is vulnerable to lose,” and added: “We think it is also possible for bitcoin to compete with gold for safe-haven demand and the two can coexist.”
According to TradingView, gold has been trending upward since April 1, which has increased from today’s $1686 to $1900.
In a Monday note, Curry said he believes objects used in the real world are the best. hedge against inflation Because they ultimately depend on demand, not growth rate:
“Commodities are spot assets that depend not on the rate of forward growth but on the level of demand relative to the level of supply today.”
“As a result, they hedge short-term unpredictable inflation when aggregate demand levels exceed supply in the late stages of the business cycle,” the note said.