Institutional investors are increasingly turning to cryptocurrency as a hedge against debasement, according to a recent report by KPMG. With the global economy facing unprecedented challenges due to the ongoing COVID-19 pandemic, many investors are seeking alternative assets to protect their portfolios from inflation and currency devaluation.
Cryptocurrency, particularly Bitcoin, has emerged as a popular choice for institutional investors looking to diversify their holdings and mitigate risk. The decentralized nature of cryptocurrencies makes them immune to government manipulation and inflationary pressures, making them an attractive option for those seeking a safe haven in times of economic uncertainty.
According to the KPMG report, institutional investors are increasingly viewing cryptocurrency as a legitimate asset class that can provide long-term value and stability. In fact, many hedge funds and asset managers have started to allocate a portion of their portfolios to cryptocurrencies in order to hedge against potential debasement of traditional fiat currencies.
One of the key reasons why institutional investors are turning to cryptocurrency as a hedge against debasement is the limited supply of many cryptocurrencies, such as Bitcoin. Unlike traditional fiat currencies that can be printed at will by central banks, cryptocurrencies have a fixed supply cap that cannot be altered. This scarcity factor has made cryptocurrencies an attractive store of value for investors looking to protect their wealth from inflation.
In addition to the limited supply of cryptocurrencies, the growing acceptance and adoption of digital assets by mainstream financial institutions has also contributed to their appeal among institutional investors. Major companies like PayPal, Square, and Tesla have all recently announced plans to accept Bitcoin as a form of payment, further legitimizing the cryptocurrency market in the eyes of traditional investors.
Despite the volatility and regulatory uncertainties surrounding cryptocurrencies, institutional investors are increasingly recognizing the potential benefits of adding digital assets to their portfolios. As the global economy continues to face challenges from inflation and currency devaluation, it is likely that more institutional investors will turn to cryptocurrency as a hedge against debasement in the coming years.