Bank on Bitcoin to Beat Inflation

With oil prices trending higher, among other factors, market participants are bracing for a renewed round of elevated inflation. That could stoke renewed interest in traditional inflation-fighting asset classes, but investors may not want to overlook the ability of bitcoin to act as inflation protection. While digital currencies, including bitcoin, endured the “crypto winter” last year as inflation was historically high, some market observers believe there’s growing evidence to support bitcoin’s inflation-topping credentials. Investors can access that protection with funds like the Bitwise Bitcoin Strategy Optimum Roll ETF (BITC).

Launched by San Francisco-based Bitwise earlier this year, BITC is a futures-based bitcoin ETF, but it’s a departure from competing products in the space because many futures-based ETFs, regardless of underlying asset, aren’t great long-term investments. In positive fashion, BITC goes the other way.

“The fund provides directional exposure to bitcoin via regulated futures contracts and seeks to maximize potential roll returns through a selective analysis of bitcoin futures beyond front- or near-month contracts,” according to the issuer.

Fight Inflation With BITC

In addition to its accommodative structure, BITC has the goods when it comes to implementing some inflation protection within portfolios — a potentially desirable attribute in the current environment.

“G7 central banks, including most importantly the Federal Reserve, will not be able to exit from unconventional monetary policy in a benign manner and will ultimately remain committed to ongoing central bank balance-sheet expansion in one form or another,” said Christopher Wood, global head of equity strategy at Jefferies, in a recent report.