Nassim Taleb questions Bitcoin as a financial hedge

Bitcoin price movements during periods of financial turbulence in the United States have not confirmed its role as a safe-haven asset, according to the renowned writer and scholar Nassim Taleb.

So the US hits a funding risk => bitcoin goes down.
Earlier, inflation shows up => bitcoin went down.
How many \”bitcoin is a hedge\” suckers are left?#Suckers

— Nassim Nicholas Taleb (@nntaleb) May 25, 2023

The author of The Black Swan noted that the price of cryptocurrency fell both as inflation rose and during the current budget-financing problems.

“How many more ‘suckers’ are there for whom ‘Bitcoin is a hedge’?” Taleb asked.

He also noted to potential opponents that citing the cryptocurrency’s past returns as an argument is not valid. Investors invest in an asset’s future growth based on its current price, the writer emphasized.

Twitch co-founder Emmett Shear agreed with him, but noted that digital gold has a different “real purpose”.

Bitcoin isn’t a hedge. It’s a technology for remittances and holding value securely in countries which screw over their citizens with below-market exchange rates and corruption. Sure, it has downsides…but what’s their alternative?

— Emmett Shear (@eshear) May 26, 2023

“Bitcoin isn’t a hedge. It’s a technology for remittances and holding value securely in countries that deceive their citizens with exchange rates below market and corruption,”

The entrepreneur stated.

The startup founder Shaan Puri supported Shear, calling the cryptocurrency an alternative to fiat monetary systems. In his view, Bitcoin will displace them, as email displaced the postal services after the advent of electronic messaging.

I would say it’s an alternative monetary system to the fiat systems.

Similar to how email was an alternative communication system to the postal service

— Shaan Puri (@ShaanVP) May 26, 2023

The host of The Present Father’s podcast, known as StudMuffin.eth, nonetheless found a role for digital gold as insurance:

“Bitcoin doesn’t hedge financial risks or inflation. It’s also not insurance against deflation. Its main value as a hedge is against bank failures. When SVB collapsed, Bitcoin rose.”

Bitcoin is not a hedge against funding risk or inflation. It is also not a hedge against deflation. It’s primary value as a hedge is against bank failures. When SVB collapsed, bitcoin surged.

— StudMuffin.eth (@schemesymcplots) May 25, 2023

One commenter replied to Taleb that he hadn’t heard from the Bitcoin community’s “hedge” meme in a year. However, a well-known proponent of this narrative, the author of Rich Dad Poor Dad and entrepreneur Robert Kiyosaki, on May 19 reiterated his call to invest in cryptocurrency, gold, and silver. He regards these assets as “the best hedge against corruption and incompetence.”

Earlier, in critiquing Bitcoin, Taleb had compared it to a ‘tumor’ and called ‘a golden goose’ for lawyers. More than a year ago he stated that cryptocurrency would not save investors from inflation and market declines.