Diversifying Your Portfolio: Bitcoin and Gold Team Up to Fight Inflation

Investors now have a new tool to protect their money from inflation. A recent fund combines Bitcoin and gold, aiming to shield wealth from the declining value of currencies like the U. S. dollar. This fund, called the Bitwise Proficio Currency Debasement ETF, started trading on the NYSE under the ticker BPRO. It's a team effort with Proficio Capital Partners, a Boston-based firm managing around $5 billion. The fund actively adjusts its investments based on market conditions, with at least 25% always in gold. It also includes silver, platinum, palladium, mining stocks, and Bitcoin. Gold and silver prices have surged recently, up 79% and 207% respectively over the past year. Meanwhile, Bitcoin has seen a 15% drop over the same period, despite reaching a peak above $126, 000 in October. The idea behind this fund is to address concerns about governments printing too much money, which can lead to inflation and wealth loss. Matt Hougan, the Chief Investment Officer, sees currency debasement as a major risk to long-term financial health. He notes that the dollar has lost significant value over the past 15 years, and this trend is speeding up.The fund is designed for financial advisors who may not have much exposure to assets that protect against wealth loss. Hougan even mentions his son's $10 trillion Zimbabwean dollar banknote as a reminder of hyperinflation's impact. However, this fund comes with a higher cost. Its expense ratio is 0. 96%, compared to Bitwise's spot Bitcoin ETF, which has a lower 0. 2% expense ratio. Ray Dalio, a billionaire hedge fund manager, has been advising people to allocate 15% of their portfolios to gold and Bitcoin, warning of a potential debt crisis. While he prefers gold, he acknowledges Bitcoin's role. Last year, BlackRock CEO Larry Fink described Bitcoin and gold as "assets of fear. " However, Bitcoin has recently behaved more like a risk-on asset. Fink also noted that fears over financial and physical security could drive investors toward these assets. Central banks aren't buying Bitcoin, but Hougan points to the demand from spot Bitcoin ETFs as a similar dynamic. These ETFs have been buying more than 100% of the Bitcoin mined each day since early 2024. Hougan believes this could lead to a parabolic move in Bitcoin's price, similar to gold's recent surge.