March 2021

Digital Gold: Breaking down Bitcoin and other digital assets

Bitcoin prices have surged this year. The sharp rise in investor interest for the digital currency that is often referred to as Digital Gold can be ascribed to the sentiment many investors have that Bitcoin can act as a store of value given its fixed supply, a medium of exchange, and an alternative asset for diversified portfolios.

While we agree that there are some attractive characteristics to Bitcoin, Tiedemann still does not recommend a direct allocation to it (or to any other digital assets). We prefer other diversifying assets like gold that are more liquid, carry significantly less risk from competition and regulators, and have lower price volatility. We believe the exposure our clients currently have to digital assets and blockchain technology via actively managed funds investing in the ecosystem is sufficient. However, should a client choose to make an investment, we can help facilitate the direct ownership of certain digital assets and recommend doing so via an SEC-approved institutional custodian.

In this piece we discuss our views on Bitcoin and why we still prefer gold as a diversifying asset for our client portfolios.

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