Why You Shouldn’t Hedge Against Bitcoin With Stocks
Don’t ever bet against the king of crypto – it never ends well.
WHY YOU SHOULDN’T HEDGE AGAINST BITCOIN WITH STOCKS
“Why would someone go all in on bitcoin as opposed to diversifying into other asset classes, particularly stocks? Why not hold an index tracking fund like the S&P 500?
The short answer: because, as the premier monetary medium, bitcoin will absorb the monetary premiums of all other assets, including stocks.
You may be unsatisfied with this answer, but a full answer to the question ‘Why not hedge against bitcoin with stocks?’ requires us to forecast bitcoin’s expected value and then compare it with the expected return on equity.
Today, people typically measure economic value in fiat currency units. But rather than using fiat as a unit of account, we need to look elsewhere. My thesis is that bitcoin will absorb all other assets’ monetary premiums, so we can’t start by measuring in terms of units that are expected to be absorbed.”