The U.S. dollar has taken a huge hit with the onset of the coronavirus pandemic. The US Federal Reserve (Fed) had printed a shocking amount of money to combat the crisis, wreaking havoc on America’s economy. On this note, former Facebook executive-turned venture capitalist, Chamath Palihapitiya, states that holding Bitcoin is an “insurance policy“ which helps him “sleep soundly at night”, and even a new president can’t help the dollar.
In an interview with CNBC’s Squawk Box this week, the venture capitalist stated:
“The reality is that [the Federal Reserve and the U.S. Treasury] have printed so much money that the likelihood is that we’re going to continue to see asset price inflation independent of who’s in the White House.”
Adding that this is why he holds Bitcoin, “in case the central banks and governments of the world step on a landmine.”
The stimulus program saw the Fed pouring trillions of dollars in the market in an attempt to mitigate the damage dealt by the pandemic. This saw the stock market jump to record highs, despite unemployment rates spiking in the nation and fears of inflation has sparked amongst investors.
Bitcoin should be in every portfolio
Palihapitiya is a long time Bitcoin advocate and argues that the number one crypto asset is able to serve as a long-term store of value. He asserts that it should be included in the portfolio of every investor.
“I still think that what I talked about sort of eight or nine years ago still holds, which is as a 1% hedge in our portfolio.”
Similar sentiments were portrayed in an earlier report from digital asset management firm Coinshares last month, with the report suggesting that investors could benefit from a small percentage of exposure to Bitcoin in their overall investment portfolios.
Palihapitiya bought his first Bitcoin seven years ago and expects the price to hit as high as $1 million per over the next 20 years.
However, he warns investors not to speculate on Bitcoin’s price for short term profits, and advises them to hold the asset and “hope that you never need it because the amount of actual chaos that will drive bitcoin appreciation is not something we actually really want to see.”
“The reality is [bitcoin’s] fundamentally not [correlated with stock markets] because it is underpinned by a set of beliefs that are completely orthogonal to the orthodoxy that runs the world today, and it is completely the inverse of how the financial infrastructure of the world operates.”