Why You Shouldn’t Hedge Against Bitcoin With Stocks

Written April 11, 2021

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.

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