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Jurrien Timmer: Understanding Bitcoin
Among an increasing number of investors and portfolio managers, Bitcoin is considered a legitimate and distinct asset class. Jurrien Timmer, Director of Global Macro, Fidelity Investments, summarizes Bitcoin’s evolution and why it may be considered, alongside other alternatives, as part of an investment portfolio.
- Bitcoin, by design, is a finite asset, with both a unique supply and a unique demand dimension, and as its network increases, bitcoin’s value and durability could increase even faster.
- Seen as a form of “digital gold,” bitcoin may act as a stable store of value and potentially offer protection against inflation—and even hyperinflation.
- Bitcoin, however, faces risks from volatility, competitors, substitutes, regulation, and other factors; further, bitcoin may not be an appropriate or prudent diversifier for all portfolios.
- In my view, some investors may wish to consider bitcoin, alongside other alternatives, as one component of the bond side of a 60/40 stock/bond portfolio.