Morgan Creek capital CEO Mark Yusko referred to Bitcoin (BTC) as a “Chaos hedge, or Schmuck insurance”, in an interview with CNBC Fast Money on Aug 14. Yusko made this comments while pointing out the trouble of people judging Bitcoin based on daily price action. According to him, people who stalk the charts and mark BTC’s every price move are missing the point.
Does BTC’s price correlate with global turmoil?
The fast money interviewer noted that a lot of buzz had been generated by BTC’s latest Bull-run and its co-relation to global turmoil. She wondered if the fact that global turmoil has worsened had anything to do with BTC’s latest price dip.
BTC price watchers missing the point
Yusko responded to the question by categorically stating that people who are watching the daily price of Bitcoin are really missing the point. According to him, BTC’s daily price action was the wrong thing to focus on.
“The whole idea of Bitcoin is it’s a store of value,” he said: “It’s a chaos hedge, or schmuck insurance, as I like to call it.”
He suggested that people should look at long-term trends, emphasizing that it’s better to own a piece of the network that to own nothing at all.
Bitcoin as a hedge to traditional assets
Yusko suggested that Bitcoin had a big role to play as a hedge for traditional financial markets. He advised; “You want to have 1, 2, 3, 5% of your net worth in this asset as a hedge, against all the problems that we see in the fiat markets and the equity markets.”
This backs up Yusko’s own remarks back in May, where he said that Bitcoin should be part of any serious investor’s portfolio. Though Yusko has been very pro-Bitcoin and quite liberal towards cryptocurrencies in general, his suggestion of a 5% investment in BTC is quite conservative. This is in comparison to Morgan Creek Digital founder Anthony Pompliano who recently revealed that more than 50% of his net worth is in BTC.
The argument of whether Bitcoin and cryptocurrencies in general are safe stores of value will rage on. This is perhaps until cryptos prove their doubters wrong. By then a lot of the cynics would probably have missed out on massive opportunities to grow their wealth. In the meantime though, we can all expect cynics like Nouriel Roubini to give anti-crypto sound bites and opinions.
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