Bitcoin Revisited | WT Wealth Management White Paper

Since the 2020 Pandemic, we at WT Wealth Management have been both fascinated and mystified about the public's captivation with Bitcoin and other cryptocurrencies ("Crypto"). Internally, we have had conversations about the role of Crypto in a client portfolio. Is it a speculative asset class, an alternative to gold, an alternative currency, or all the above?

Almost five years later, our view is crystallizing around the possibility that Bitcoin could play a role more akin to precious metals than a transactional, alternative to traditional currency. More conventional thinking believes Bitcoin is a non-sovereign asset that holds potential as an inflation hedge versus fiat currencies, such as the United States Dollar, Japanese Yen, or Euro.

Inflation hedges usually have the characteristic of being a scarce resource, i.e., limited supply and not easily replicated. Bitcoin, by design, has a limited supply of 21 million “coins". ⁽¹⁾ This is a stark contrast to the US Dollar, which can theoretically be “printed" with no limit. Milton Friedman, a Nobel Prize Laureat for Economics, famously stated that “Inflation is always and everywhere a monetary phenomenon." Across the globe, unprecedented economic stimulus during the 2020 Pandemic created alarming inflationary pressures as central banks “printed" money to finance ballooning government budgets.

Bitcoin, with its fixed supply, is becoming more widely accepted as a potential inflation hedge.

In 2008, the Global Financial Crisis primarily centered on over-leveraged banks, necessitating a recapitalization through quantitative easing ("QE") and a much-maligned Wall Street bailout. The Federal Reserve's creation of new bank reserves to purchase assets like Treasuries didn't significantly impact consumer prices, leading to contained inflation despite predictions of hyperinflation.

Meanwhile, 2020 faced a broader economic crisis due to the Pandemic. While banks were well-capitalized, the wider economy suffered because of a global shutdown. The response combined QE with unprecedented fiscal stimulus, where the Federal Reserve's purchase of Treasuries funded direct financial aid to the public, as stimulus checks. The 2020 Pandemic bailout increased the broad money supply, which pushed up prices for many goods and services resulting in the highest inflation level in over 40 years.

Figure 1: Monthly 12-month inflation rate in the United States from January 2020 to January 2024 ⁽²⁾

https://www.dwassetmgmt.com/blog/monthly-12-month-inflation-rate-in-the-united-states-from-january-2020-to-january-2024

The current economic environment suggests that inflation might not be as transitory as initially thought by Federal Reserve Officials, economic experts, and market participants. The U.S. is now grappling with unparalleled debt levels, massive fiscal spending that any Presidential Administration is seemingly unwilling to curb, along with a shift away from globalization.

Bitcoin's value is influenced by external factors such as interest rates, economic policies, and global events, making its performance as an inflation hedge somewhat like other limited supply asset classes like gold, silver, real estate, and commodities. Bitcoin's potential as a hedge against inflation stems from its decentralized nature, finite supply, and growing acceptance as a store of value. ⁽³⁾

As for the future, opinions vary, but many believe that Bitcoin, given its growing acceptance, popularity, and broader integration into the financial system, will play a key role in hedging against inflation. As a result, our thinking at WT Wealth Management is that Bitcoin may be used alongside traditional real assets like precious metals and other scarcer commodities.

As a result, WT Wealth Management has created a “real asset" portfolio we have coined “Mineral Mint." This new sleeve can be implemented into existing portfolios, providing exposure to many asset classes average investors are usually dramatically under-allocated to in their portfolios. Mineral Mint contains Gold, Gold Miners, Silver, Base Metals, Copper, Managed Futures, Agriculture, Liquid Natural Gas, Commodities, Energy Infrastructure, Oil and Gas Exploration, Uranium and now Bitcoin.

Figure 2: Mineral Mint Holdings (as of January 2025)

Symbol	Name	Weighting %
SGOL	ABRDN PHYSICAL GOLD SHARES ETF	18.5
ENFR	ALERIAN ENERGY INFRASTRUCTURE ETF	18
SIVR	ABRDN PHYSICAL SILVER SHARES ETF	12
BITB	BITWISE BITCOIN ETF	7.5
CTA	SIMPLIFY MANAGED FUTURS STRGY ETF	7
DBA	INVESCO DB AGRICULTURE FUND	7
DBB	INVESCO DB BASE METALS FUND	7
GDX	VANECK GOLD MINERS ETF	6
LNGZ	RANGE GLOBAL LNG ECOSYM INX ETF	6
COPX	GLOBAL X COPPER MINERS ETF	6
NLR	VANECK URANIUM AND NUCLEAR ETF	5

As we enter 2025, and concerns about future purchasing power weigh on the minds of many investors, this is an excellent conversation to have with your financial advisor. We believe that if the current economic environment persists, and inflation proves more stubborn than the Federal Reserve anticipates, exposure to these asset classes could be helpful, depending on your specific financial situation.

Sources

What Happens to Bitcoin After All 21 Million Are Mined?
investopedia.com
Monthly 12-month inflation rate in the United States from January 2020 to January 2024
dwassetmgmt.com
What Influences Bitcoin Price? Key Factors to Consider
markets.com

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