Morgan Stanley (NYSE: MS), one of the most prominent investment banks on Wall Street, has picked gold instead of Bitcoin while recommending an inflation-resistant portfolio strategy recently.
A 60/20/20 portfolio strategy, with 20% allocation to gold, is currently a more resilient inflation hedge when U.S. equities are offering historically low upside over Treasuries and investors are demanding higher yields for long-term bonds, the bank's Chief Investment Officer Mike Wilson recently said .
Bitcoin is often described as a hard asset because its supply is capped at 21 million coins, making it scarce like gold. Many investors call it "digital gold" for its potential role as an inflation hedge and store of value.
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Wilson recommends gold but skips Bitcoin
The 60/40 portfolio, generally recommended, allocates 60% of funds to stocks and 40% to fixed income. The assumption is that while stocks will rally during a bullish market turn, bonds will rise during a turbulent market. This way, one asset class can offset the downtick witnessed in another class.
Wilson offered a different portfolio strategy as per which 60% of funds are allocated to stocks and 20% each to fixed income and gold. He added:
"Gold is now the anti-fragile asset to own, rather than Treasuries. High-quality equities and gold are the best hedges."
While equities are risk-on investments for growth, gold is a safe haven asset during times of crisis. Both the assets are hedges against inflation but during different turns of the market.
After the "Liberation Day" on Apr. 2 when President Donald Trump escalated the global tariff war, stocks plunged but have since shown remarkable recovery.
As the Federal Reserve announced a rate cut of 0.25% on Sep. 17, there has been a further rally. The Nasdaq Composite index rose to 22,768.843 points and the S&P 500 index rose to 6,689.60 points — both indices hitting new record highs on Sep. 22.
Gold's spot price also reached a new record high of $3,738.18 per oz on the day.
However, Wilson didn't recommend Bitcoin as an inflation hedge at all.
The cryptocurrency, which hit a record high price of $124,457.12 more than a month ago, didn't witness any visible price appreciation following the Fed's announcement. It was trading at $112,571.44 at the time of writing, down 2% over the last seven days.
While the crypto market is getting increasingly tied to the macroeconomic trends, it seems it's still far removed from other traditional investments like gold in reacting to those trends.
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Gold or Bitcoin as inflation hedge
An inflation hedge is an investment that seeks to help the investors offset potential losses amid inflation when the purchasing power of money declines.
Investors generally turn to gold as an inflation hedge amidst uncertainty in the market as they trust the bullion to show resilience during such circumstances.
Crypto enthusiasts have long claimed that Bitcoin's limited supply makes it a scarce asset like gold. They also call it "digital gold" and argue it can similarly be invested in as a hedge against inflation.
Let's compare the price trajectory of the two assets over the last year. While gold's price has rallied 40% during the period, Bitcoin's price has rallied nearly 80%.
Why the Morgan Stanley CIO preferred gold over Bitcoin as an inflation hedge despite this metric can be explained by a few factors.
One, gold is an old store of value well-trusted by a large number of people across the globe. Bitcoin is a relatively novel asset and its highly technical nature still makes it inaccessible to a lot of investors.
Two, gold has been shown to be far more stable than Bitcoin. In fact, the latter is known to be a notoriously volatile asset.
Three, gold is legal to buy and own in all countries. But Bitcoin's ambiguous regulatory status across different jurisdictions doesn't make it an easy investment choice.
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This story was originally reported by TheStreet on Sep 22, 2025, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.
