Is Bitcoin the New Gold for Millennials?

According to a finance professor at Wharton, Bitcoin (BTC), the world's most valuable cryptocurrency, has replaced gold as an inflation hedge for younger investors.

In a Friday Squawk Box interview on CNBC, Wharton School finance professor Jeremy Siegel said that gold's performance in 2021 was “disappointing.”

According to Siegel, BTC is becoming more popular as an inflation hedge among younger investors:

“Let’s face the fact, I think Bitcoin as an inflation hedge in the minds of many of the younger investors has replaced gold. Digital coins are the new gold for the Millennials. I think that the story of gold is a fact that the young generation is regarding Bitcoin as the substitute.”

During the 1970s inflation, older generations saw gold skyrocket, Siegel recalled. “This time around, it’s not in our advantage,” he continued.

Historically, gold has provided a buffer against inflation, but in 2021 it failed to match investors’ expectations, having its worst year since 2015 and dropping to $1,800 at the end of the year. Despite the huge price fluctuations during the year, BTC increased by about 70% by the end of 2021.

In October 2021, Dallas Mavericks owner Mark Cuban claimed that Bitcoin would be "better than gold". Barry Sternlicht, co-founder of Starwood Capital Group, described gold as "worthless" and noted that he had kept Bitcoin because every government was producing large amounts of money.

Despite Bitcoin becoming a more popular asset against gold, many financial and crypto experts say it has yet to demonstrate its inflation hedge status.