With the increasing inflationary concerns over the past weeks, investors have been eyeing assets that may act as an inflation hedge such as gold (XAUUSD), properties, and cryptos.
The CEO of Kraken, the largest Bitcoin exchange, Jesse Powell said in a Bloomberg Television interview that bitcoin could reach $1 million in the next decade, which could eventually take over the mainstream fiat currencies.
Wild predictions on Bitcoin (BTCUSD) are not uncommon, especially at times where the US has introduced an unprecedented QE program and inflation expectation of 2.5% over the next five years has reached its highest level since 2008.
Bitcoin on Thursday fell 4.08% to near $48,300 and is currently trading lower near $46,900 as at the time of writing on Friday. Prices since 2020 have surged nearly 600% reflecting the increasing interest and mainstream adoption from institutions. An analyst from JP Morgan in February said that Bitcoin has the potential to reach $146,000 given fundamental growth and continual institutional support.
On the flip side, the Financial Conduct Authority (FCA) had warned investors early in the year that they may lose all the money invested in high-yield digital currency schemes.
In summary, regardless of an investor’s risk appetite, digital currencies may act as an inflation hedge, a speculative asset, and a diversification to the portfolio.
Whether Powell’s prediction is true, only time will tell…
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