Dr. Jeff Ross, Founder and CEO of WellShare Capital, now logic 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 people want to preserve and slowly grow their purchasing power, not spread risk.
Bitcoin is meant to preserve purchasing power
The CEO’s view directly contradicts the conventional wisdom held by financial advisors. Most people recommend diversification as a key strategy to reduce risk, which includes holding valuable assets such as gold.
In contrast, Ross claims that traditional assets such as bonds, while offering diversification, may be sensitive to inflation risks, potentially affecting purchasing power in the long run.
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Ross express reaction Robin Crooks, former chief FX strategist at Goldman Sachs, who undermined Bitcoin’s recent rally. According to Crux, BTC is reaching higher levels due to a market adjustment. This shift is giving a boost to BTC and other safe havens, as the United States Federal Reserve (Fed) prepares to change monetary policy, possibly cutting rates in March.
It’s this expectation, says Crookes, that explains why Bitcoin is surging. The analyst stressed that the coin is not bullish because it has the advantage of “diversification” due to its store of value assets. Bitcoin holders often cite the deflationary nature of the coin and how it can protect against the devaluation of traditional assets as an advantage.
Still, and despite the volatility, Ross countered Crux’s preview by pointing to BTC’s historical performance and how it has succeeded in “preserving and enhancing 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 support this point, Crooks, who has been dismissive of Bitcoin in the past, said 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’s uptrend continues ahead of halving
The world’s most valuable coin is set for more circulation by early 2024. One reason the community is excited is the approval of a spot Bitcoin exchange-traded fund (ETF) by the United States Securities and Exchange (SEC). Through this product, investors are doubling assets, placing bids higher and subsequently taking the coin to new highs.
Bitcoin price is moving upwards on the daily chart. Source: BTCUSDT on Binance, TradingView
Also, the network will adjust the amount of coins distributed as block rewards to miners starting in early April. Then, the reward will be halved to 6.25 BTC.
Based on historical performance guidelines, expected emissions reductions could yield greater benefits in the second half of 2024. The halving will 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