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Global financial services firm Jefferies has warned of “the collapse of the U.S.-dollar paper standard to the benefit of both gold bullion owners and also owners of bitcoin.” He explained that the Federal Reserve, and other G7 central banks, “will not be able to exit from unconventional monetary policy in a benign manner and will ultimately remain committed to ongoing central bank balance-sheet expansion in one form or another.”
Global investment bank Jefferies has cautioned about the potential collapse of the U.S. dollar, which could prove advantageous for bitcoin holders. Jefferies is a leading global, full-service investment banking and capital markets firm headquartered in the U.S. The firm operates across the Americas, Europe, the Middle East, and Asia Pacific.
In a note to investors published Wednesday, Chris Wood, Global Head of Equity Strategy at Jefferies, called bitcoin and gold “critical hedges” against currency debasement and diminishing returns from inflation. Wood has received several recognitions, including Best Strategist in 2020 in the Asia region by Asiamoney.
Wood explained that in addition to reducing its balance sheet, the Federal Reserve has been raising interest rates at an unprecedented pace in its efforts to tame soaring inflation. He believes that the Fed may be forced to abruptly adopt a dovish stance in the face of a U.S. recession as the central bank grapples with a $33 trillion U.S. “debt death spiral.”
The Jefferies analyst warned: “G7 central banks, including most importantly the Federal Reserve, will not be able to exit from unconventional monetary policy in a benign manner and will ultimately remain committed to ongoing central bank balance-sheet expansion in one form or another.” He emphasized:
Such a failure to exit from unorthodox monetary policy in a benign manner is likely to culminate in the collapse of the U.S.-dollar paper standard to the benefit of both gold bullion owners and also owners of bitcoin.
Wood advised investors to regard their gold and bitcoin holdings as a type of insurance, rather than short-term trades. Additionally, he recommends that U.S. dollar-based long-term global investors, including pension funds, allocate 10% of their portfolios to BTC.
The analyst further described:
Bitcoin has now become investible for institutions, with custodian arrangements in place for digital assets, and represents an alternative store of value to gold.
