In a recent interview, Jurrien Timmer, Director of Global Macro at Fidelity Investments, compared the growth path of Bitcoin with that of Apple stock.
In March 2021 Timmer published a 12-page research paper on Bitcoin (title: “Understanding Bitcoin: Does bitcoin belong in asset allocation considerations?”).
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Timmer started by saying that he intended his paper to serve as “a brief plain-English primer, but also to assess, in a meaningful way, the value proposition of bitcoin as it relates to asset allocation.”
After his study of Bitcoin, here were some of the conclusions he came to:
- “… bitcoin has gone mainstream, already considered a legitimate asset class by more and more investors.“
- “… bitcoin has both a compelling supply dynamic (S2F) and demand dynamic (Metcalfe’s Law).“
- “… bitcoin is gaining credibility, and as a digital analog of gold but with greater convexity… bitcoin will, over time, take more market share from gold.“
Timmer said that “if gold is now competitive with bonds, and bond yields are near zero (or negative), perhaps it makes sense to “to replace some of a portfolio’s nominal bond exposure with gold and assets that behave like gold.”
He finished by saying:
“If bitcoin is a legitimate store of value, is scarcer than gold, and comes complete with a potentially exponential demand dynamic, then is it now worth considering for inclusion in a portfolio (at some prudent level and at least alongside other alternatives, such as real estate, commodities, and certain index-linked securities)?
“Despite the many risks discussed—including such factors as volatility, competitors, and policy intervention for some the answer may well be ‘yes,’ at least insofar as that ‘yes’ applies only to components on the 40 side of 60/40. For those investors, the question of bitcoin may no longer be ‘whether’ but ‘how much?’.“
Well, on Tuesday (February 8), Timmer gave an interview to Preston Pysh for episode BTC064 of the Bitcoin Fundamentals podcast, which is the flagship podcast of the Investor’s Podcast Network.
According to a report by The Daily Hodl, here are a couple of highlights from Timmer’s comments on Bitcoin:
- “I’ve compared the whole network effect for Bitcoin to Apple computers’ network effect. So as Apple grows its revenues its stock price goes up exponentially from that. It doesn’t go up in line… Bitcoin is following in the same path. And so I think there’s some very robust logic to why Bitcoin should see higher values as the demand curve evolves.“
- “Maybe other digital assets will do better [relative to Bitcoin] because they are more scalable but at the same time maybe they’re less decentralized. And that’s why I would say that to me Bitcoin is an asset class like a store of value, like gold. And the rest of the digital asset space is more almost like a venture asset.“
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