Bitcoin and cryptocurrency prices have exploded this week, adding a staggering $500 billion to the overall crypto market capitalization in only a few days.
Bitcoin’s price has increased by roughly $10,000 in the previous week, reaching $56,000—a level not seen since May’s massive sell-off. Now, the investment firm established by renowned hedge fund manager George Soros has disclosed its ownership in bitcoin, with its chief executive and chief investment officer describing bitcoin as “less interesting than the use cases of [decentralized finance (Defi)].”
“We possess a few coins—not a lot,” Dawn Fitzpatrick, CEO of Soros Fund Management, told Bloomberg last week. “The coins themselves are less intriguing than the application scenarios for Defi and similar technologies.”
The popularity of Defi, the concept that traditional financial services may be replicated using crypto technology, has increased significantly this year, contributing to the price increase of ethereum and other comparable cryptocurrencies.
“I’m not certain bitcoin is seen solely as an inflation hedge in this country,” Fitzpatrick added. “I believe it has crossed the abyss and into the mainstream.”
Fitzpatrick stated in March that bitcoin is at an “inflection point” following a price spike to never-before-seen highs. “Something like bitcoin may have remained a fringe asset had we not expanded the money supply in the United States by 25%,” she explained.
However, inflation remains a significant driver of interest in bitcoin, according to JPMorgan analysts, who stated in a note that bitcoin’s recent price rise is at least partially attributable to institutional investors seeking a hedge against inflation.
“The resurgence of inflation fears among investors has re-ignited interest in bitcoin as an inflation hedge,” the analysts said, adding that investors view bitcoin as a “superior inflation hedge than gold.”
This week, Wall Street behemoth Bank of America BAC +0.5 percent said that bitcoin and cryptocurrency had grown “too huge to ignore,” joining JPMorgan, Goldman Sachs GS +0.6 percent, and Citi in offering bitcoin services and trading.
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