The interest of private investors in Bitcoin and gold is growing amid a decline in trust in fiat currencies. This opinion was expressed by Matt Hougan, the Chief Investment Officer of Bitwise Asset Management. He believes that most people perceive the fiat system as something familiar, without considering its fundamental stability.
This is reported by Finway
Why Investors Are Moving Away from Fiat
Hougan compared fiat to “water for fish,” which almost no one notices. In his view, the abandonment of the gold standard in 1971 was a turning point for the global financial system. Since then, according to the expert, a deficit of trust in governments has driven investors to seek alternatives — primarily in the form of Bitcoin and precious metals.
The expert also notes that central banks have significantly increased their gold purchases, especially after the 2008 financial crisis and Russia’s invasion of Ukraine. Such actions are explained by concerns about the devaluation of reserve currencies and the potential confiscation of assets. Gold has already become the second-largest reserve asset in the world, surpassing the euro, Hougan emphasized.
Bitcoin as Digital Gold
Similar motives, as the Chief Investment Officer of Bitwise claims, also influence the behavior of private investors. Many of them view Bitcoin as a digital equivalent of gold that can protect them from monetary risks.
In the first half of 2024, inflows into Bitcoin ETFs amounted to $45 billion, while gold ETFs attracted only $34 billion. However, the scale of the Bitcoin market currently does not allow central banks to actively invest in this asset, but the trend of growing interest is evident.
“Most investors were educated during a time when fiat was seen as a symbol of progress. Now, more and more people are asking the question: ‘What is fiat and why do we consider it stable?’ Against this backdrop, Bitcoin is becoming a tool for protection against monetary risks,” Hougan emphasized.
The expert also highlighted that traditional portfolio strategies based on stocks and bonds are entirely dependent on fiat currencies. In contrast, gold and Bitcoin provide “rare independence.” The growing demand for limited forms of money, according to Hougan, is not just a trendy phenomenon but a response to global challenges and risks.
It is worth noting that former CEO of Strategy (formerly MicroStrategy) Michael Saylor predicts the end of the so-called crypto winter and does not expect Bitcoin to fall to zero values.