Bitcoin Is the New Gold for Those Under 40 as Cryptocurrency Becomes an Increasingly Important Asset Class
Former Federal Reserve governor Kevin Warsh says investing in Bitcoin makes sense for people under 40, who view it as the new digital gold for their generation. Warsh made the remark during an interview on CNBC’s Squawk Box.
Bitcoin emerged more than a decade ago. Despite early skepticism from institutional investors and the broader financial community, it has seen growing acceptance worldwide as more individuals allocate capital to this emerging asset class.
Substantial investment by institutions and retail traders has helped push Bitcoin’s price up by more than 400% over the past year. The token is trading above $37,000 and could potentially rise further as new investors enter the market.
Warsh said that part of the current influx of capital into Bitcoin is coming from the gold market. “I suppose that if you are under 40, Bitcoin is your new gold,” he remarked.
He suggested that if Bitcoin did not exist today, gold prices might be even higher. Warsh’s view echoes analysis from JPMorgan, whose analysts have argued that Bitcoin’s adoption and growth are occurring at the expense of gold. They highlighted that billions of dollars have shifted from the gold market into Bitcoin.
Warsh also noted that Bitcoin can make sense as a portfolio allocation given the present economic and political environment. He pointed to a fundamental change in monetary policy since the era of Paul Volcker, and said he is not surprised to see the token perform well under those conditions.
The crypto market got off to a strong start in 2021, with Bitcoin gaining $8,000 in a single week. Its rally, together with gains from other leading cryptocurrencies such as Stellar Lumen (XLM), Ether (ETH) and Litecoin (LTC), helped push the total crypto market capitalization past $1 trillion for the first time.
Bitcoin still has a long way to go to catch up with gold. The Bitcoin market is valued at roughly $700 billion, compared with about $10 trillion for gold. Nevertheless, recent institutional and retail investment into Bitcoin underscores that many now view the cryptocurrency as a valuable asset.