Brian Armstrong, the CEO of Coinbase, predicts that Bitcoin is set to become an established safe haven currency within the next decade.
On a recent episode of Coinbase’s podcast Around the Block, Armstrong mentions that the reigning cryptocurrency’s market capitalization isn’t strong enough for it to serve as a legitimate flight-to-safety asset.
Bitcoin Could Become Digital Gold in Next Decade
On the episode, which was about the state of crypto and where it’s headed, he mentions that this trend could change within five to ten years. That’s because the cryptocurrency economy will scale to make up a considerable chunk of the global economy.
Once that happens, Bitcoin could act as the digital alternative to gold, allowing investors to aim for a flight to safety in the event that things go south.
He stated that the crypto community will see the trend change over time. As the crypto market contributes a higher percentage to the global GDP, people will turn to the top-ranking token as the new alternative to gold.
The billionaire CEO acknowledged that he tended to overestimate the likelihood of Bitcoin serving as a hedge against inflation in today’s macroeconomic environment.
On the podcast, he explains that he thought it would draw attention toward Bitcoin in today’s environment, but he was overoptimistic.
Bitcoin Showed Impressive Gains Due to Rising Inflation in 2021
While inflation was on the rise in 2021, Bitcoin started to gain more value. At this point, various institutional investors and major banks suggested using Bitcoin as a hedge against inflation.
One example is that of American hedge fund manager and prominent billionaire, Paul Tudor Jones. When speaking to CNBC last year in October, he mentioned that he considers Bitcoin a stronger inflation hedge as opposed to gold.
Saying that Bitcoin would be his preferred hedge compared to gold at the moment, he’s of the opinion that the market does have room for cryptocurrencies.
At the time, he considered that Bitcoin was winning the proverbial inflation hedge race against gold. Then, JPMorgan strategists went on to elaborate that rising concerns of inflation were the driving force behind Bitcoin’s rally around October 2021.
Despite Growth, Bitcoin Shows Higher Volatility than Gold
Since September of last year, various finance firms saw changes in investment trends as more and more investors moved away from gold exchange-traded funds. Instead, they showed a preference for Bitcoin funds.
While 2021 was a good year for Bitcoin, it failed to keep up its growth streak in 2022. This is despite record-breaking inflation rates that could potentially trigger a recession. Rather than maintaining its growth so far, Bitcoin experienced devastating losses as more banks increased interest rates at a last-ditch effort to curb inflation.
However, there are many skeptics who don’t agree with him. While Bitcoin may show higher rates of growth over a period of time, it’s also much more volatile.