Investors and central banks have begun to question the stability of the fiat monetary system, stated Bitwise’s Chief Investment Officer Matt Hougan. According to him, people are seeking protection from currency devaluation in assets like gold and the leading cryptocurrency.
Hougan likened the situation to the parable of fish unaware of the water around them. He noted that financiers have operated in a fiat world all their lives, taking it for granted. Now, they are beginning to question its nature.
The expert emphasized that the “fiat era,” which began after the abandonment of the gold standard in 1971, is increasingly seen as an anomaly rather than progress.
Central Banks Opt for Gold, Retail Investors Choose Bitcoin
The specialist referred to an article in the Financial Times, which discusses the return of precious metals as a global safe-haven asset.
According to the publication, central banks have been actively increasing their gold reserves since the 2008 crisis, particularly after the geopolitical upheavals of 2022. Last year, gold surpassed the euro to become the second-largest reserve asset after the US dollar.
Central banks are seeking assets that are scarce, globally recognized, resistant to manipulation, and can be directly stored. Hougan highlighted that these qualities are inherent not only in precious metals but also in Bitcoin.
According to his data, retail investors are already opting for digital gold. The Bitwise CIO noted that since the launch of spot Bitcoin ETFs in January 2024, they have attracted $45 billion. During the same period, inflows into gold ETFs amounted to $34 billion.
Hougan believes that central banks are not yet purchasing Bitcoin due to its insufficient scale and liquidity. He predicts that this situation will change over time.
The expert concluded that a traditional portfolio of stocks and bonds leaves an investor 100% reliant on fiat currency. He stated that market participants recognize this risk and are diversifying their investments with Bitcoin and gold.
Back in May, Hougan stated that the leading cryptocurrency would maintain its status as digital gold, but investors should also consider other assets.