ByteTree CEO: ‘Gold and Bitcoin will be important components of an investment portfolio in the years to come’

by James · July 5, 2022

On Monday (July 4), Charlie Erith, Lead Portfolio Manager and CEO of research-driven investment adviser ByteTree Asset Management, wrote about the importance of gold and Bitcoin as hedging against monetary policy mistakes.

Founded in 2014, ByteTree is “a research-driven store that offers investment solutions and an institutional degree of cryptocurrency data on Bitcoin and other cryptocurrencies, as well as gold and silver, for the digital asset market.”

In a note shared with CryptoGlobe, the ByteTree manager said:

“At ByteTree, we believe that gold and bitcoin will be important components of an investment portfolio in the years to come. Not because they are guaranteed to rise (we do not know the future), but because in an inflationary era they act as a safeguard against policy errors in both directions: too lax, own bitcoin; too tight, own gold.

“The confluence of declining economic activity, increased harvest production and cooling commodity prices seems to have weakened inflation concerns so far. The market is beginning to be encouraged to win the fight against inflation, and we are nearing the end of the interest rate hike cycle. But there is a restless ceasefire.

“On the one hand, if decision-makers turn down austerity measures, they will revive inflationary pressures with one blow. The danger is that the Fed and other central banks will convince themselves that the battle has been won, and change the direction of money travel, and then inflation will only start again – and perhaps the abundant harvest will not be so good next year. On the other hand, it is clear that even the current settings have provoked a major economic downturn...

“Central banks are therefore faced with the unenviable choice to collapse the world economy, or feed the rise in inflation. The political consequences of the former are difficult to tolerate, which indicates that any evidence that inflation is coming under control will be jumped on and policy will be relaxed. Because inflation is at its core a monetary phenomenon, it will not disappear under these circumstances.“

He then went on to mention that earlier this year, his company – in collaboration with the cryptocurrency-focused regulated index provider Vinter – had launched the Vinter ByteTree BOLD Index, which “collects these remarkable assets on an equally risk-weighted basis every month”.

In April 2022, the ETP provider 21Shares and ByteTree launched “21Shares ByteTree BOLD ETP”, which Erith says is “the world’s first ETP to mix bitcoin and gold” and which “seeks to serve as an inflation hedge by tracking an index that includes bitcoin and gold and rebalances monthly according to the reverse historical volatility (360 days) for each asset. ”