Proactive - Interviews for investors
Bitwise's Bradley Duke on Bitcoin's safe haven status amid geopolitical risks; Fed rate cut impact
Bitwise Asset Management European head Bradley Duke talked with Proactive's Stephen Gunnion about Bitcoin’s performance in 2024 and how it compares to other asset classes.
Duke emphasised that Bitcoin has delivered nearly 50% returns year-to-date, far outpacing traditional investments like gold (27.7%) and equities. He also discussed how recent Fed interest rate cuts could drive liquidity, further supporting Bitcoin's rise amidst concerns of a potential recession.
Duke explored geopolitical risks as well, mentioning how Bitcoin and gold are increasingly viewed as safe-haven assets during times of global tension, such as the Middle East conflict. “Bitcoin has become a safe haven asset along with gold,” said Duke, explaining how its performance tends to improve during periods of uncertainty.
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- Broadcast on:
- 03 Oct 2024
- Audio Format:
- other
Hello, you're watching Proact, if I'm joined by Bradley Duke, he's European head at Bitwise Asset Management. Bradley, good to speak with you again and we're chatting about Bitcoin and its performance so far this year I suppose relative to other assets because we saw those new all-time highs a few months ago since then it's kind of pulled back and seems to be trading Walter. Yes, yeah, hi Steven, thanks for having me on and yeah the Bitcoin has really performed very well this year especially when compared against other major asset classes. We have seen around almost 50% return for an investment in Bitcoin since the beginning of the year and that compares very well against the next largest or the next best performing asset which is gold which has returned 27.7% since January and then really Bitcoin's performance is far superior compared to major investments like equities, the MSCI world or against the S&P 500 those are around respectively 17 and 20% are returned since since January and really has outperformed global commodities or basket of global commodities significantly and Bitcoin itself has outperformed its peers in terms of other cryptocurrencies at Bitwise or formerly ETC Group, RDA20 product looks at the you know has a basket of 20 the top 20 cryptocurrencies and which are capped at a maximum of 30% and that has performed has had a return of 16% since the beginning of the year so Bitcoin on its own has really outperformed its peers. So Bradley we had the fade cutting interest rates by 50 basis points last month and I think they have warned that we may not get another 50 basis point cut to the next meeting but still more cuts are expected how does this play out for cryptos and for Bitcoin? Well that's yeah it's a good question and so yeah as you mentioned on I think it was the 18th of September the the Fed made a larger than expected cuts of 50 basis points and the I think the market expectation is that that by the end of 2025 the total of 2% of 200 basis points will be will be cut and you know the expectation is an additional 75 basis points before the end of this year and then in 2025 125 basis points this is over and above the 50 that's already been been cut. What will be interesting and what we what we watching is whether or not the US will slide into recession or that globally well there will be a recession and typically what happens when there is a recession the the Fed tends to cut more and on average be looking at past recessions the the Fed has cut around 340 basis points so an additional 90 basis points over what the market is is currently expecting and and so this isn't in terms of how does this relate to to Bitcoin well so we we've done a we've sort of charted what you know money supply expansion versus rate cuts and and really to see that you know rate cuts lead to expanded liquidity and an expansion of money supply and of course this plays into the whole Bitcoin debasement narrative which is you know says that you know the dollar and other major currencies can be expanded and effectively debased by expanding the money supply whereas Bitcoin that cannot happen so overall it's a better money and it's a place to to invest as a safe haven was a way to restore to retain value when there is an expansion of of the global money supply so yeah so that's that's you know of course you know this is not investment advice this is just you know we're just looking at what's happened in the past and what's what's what looks like it's coming on the bent and how historically that has played into the narrative with with Bitcoin Freddie, how about some of the risks that lie ahead perhaps for for cryptos and Bitcoin and specifically geopolitical risks with the escalation of tensions in the Middle East yeah so that I mean I think that even last night there's been a real escalation in the story with with Iran sending in those missiles into into Israel and I think there is there is a worry that this is going to continue to escalate into perhaps out and out war in the region and of course what what we've seen in the past is typically people when it's geopolitical risk there's a flight to to safety what we have seen happening is that this flight to safety historically of course has always been too cold we have seen that now people also go to to Bitcoin of course since the the the fake cut Bitcoin process has grown quite nicely and this this of course is driven by the belief that this the expansion of the money supply is would lead to some debasement and then we saw a bit of a settle for last night based on you know really on this on the on the announcement of all the people's seeing this escalation happening in the Middle East but I think that's just you know a normal normal behavior where people sort of responding in knee joke reaction to the news but when we've looked at geopolitical events in the past and then mapped out what Bitcoin's performance has been in and around those geopolitical events we have seen that there has been above average returns following major geopolitical risk events in the past and that's even adjusting for average performance and you know so this is the our analysis reveals that there's excess performance of Bitcoin is still positive over geopolitical risk events you know chart that looks back looks forward 50 days and back 50 days and then maps the the max and the median through that and there is definitely a price improvement in Bitcoin even when adjusted which suggests that people that Bitcoin has become a safe haven asset along with gold for people to to to to move the assets or some of the assets to in terms of geopolitical uncertainty let's hope it doesn't get to that Bradley but thank you very much for your insights as usual thank you very much Steven that's Bradley Duke he's European head at Bitwise Asset Management