Global inflation continues to weigh on the minds of investors, which is why having diversified exposure to alternative assets is a must in order to fend off inflation.
One alternative is bitcoin, which has had a roller coaster ride over the past few months. After reaching an all-time high in November 2021, the leading cryptocurrency has fallen below $50,000 after seeing upwards of $69,000.
Nonetheless, it can still serve as an inflationary hedge given its bullish 2021. If bitcoin can see a return to form towards the upside, it can serve a purpose in any portfolio, particularly if the goal is to mitigate inflation risk.
“Like commodities, used as a complementary investment to a portfolio of stocks and bonds,” a ProShares market outlook for 2022 notes. “Particularly because of its fixed supply, bitcoin is also often viewed as a hedge against inflationary pressures.”
“Barriers to invest in the asset class have previously been high and included the use of unregulated exchanges or wallets,” the outlook adds further, noting in a chart below that it has vastly outperformed stocks and bonds. “However, recent innovations—including bitcoin-linked ETFs—have made exposure to bitcoin more attainable for the average investor. Bitcoin is volatile and relatively uncorrelated with traditional asset classes, so a modest allocation may go a long way.”
Accessible Bitcoin Exposure Sans the Volatility
While Bitcoin has become less volatile over the years as its popularity as an investment vehicle grows, investing directly in the cryptocurrency still isn’t for the weak at heart. That’s where the ProShares Bitcoin ETF (BITO) comes into play.
As the ProShares market outlook mentions, ETFs linked to the leading cryptocurrency can make the digital currency more accessible to investors. Furthermore, investing directly in the digital asset on a public exchange opens potential hacking risks, as the ProShares outlook also notes.
Therefore, as opposed to directly investing in the cryptocurrency itself, another way to get alternate exposure to bitcoin is to play its future price increases. As such, ETF investors may want to play on this bullish notion with Proshares’ BITO.
Investors who can’t stomach the volatility that’s hit bitcoin as of late but still want alternative asset exposure to the leading cryptocurrency may want to give the fund a closer look. Additionally, bitcoin’s price of just over $40,000 (as of January 14) may not fit everyone’s budget, but BITO can provide alternate exposure at a lower price of entry.
For more news, information, and strategy, visit the Crypto Channel.