Inflation-hedge, risk-on bet: What’s behind bitcoin’s 2020 rally?

By Andrea Leccese

July 3rd, 2021

LONDON (Reuters) – Is it an inflation hedge? A currency? Or just another niche asset to take a punt on? Bitcoin is in the headlines, re-kindling a debate over its true role and the drivers behind its latest scintillating rally.

Bitcoin, with a history of vertiginous ascents and steep drops, is close to taking out its record peak of near $20,000, having climbed almost 160% this year. Its gains in November alone are more than 30%.

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Andrea Leccese

Andrea is President and Portfolio Manager at Bluesky Capital. Prior to founding Bluesky Capital, Andrea worked as a Quant at Sauma Capital, a quantitative hedge fund in New York, and as a management consultant at Ernst & Young. Andrea holds an M.S. in Financial Engineering from Columbia University, and an M.S. in Industrial Engineering from the University of Rome "La Sapienza".

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This article is intended for academic and educational purposes and is not an investment recommendation. The information that we provide or that is derived from our website should not be a substitute for advice from an investment professional. The hypothetical models discussed in this paper do not reflect the investment performance of any actual product or strategy in existence during the periods tested and there is no guarantee that if such product or strategy existed it would have displayed similar performance characteristics. A decision to invest in any product or strategy should not be based on the information or conclusions contained herein. This is neither an offer to sell nor a solicitation for an offer to buy interests in securities.

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