Gold, Not Bitcoin, Is the Real Digital Safe eng samprotikee

The market was convinced that Bitcoin was the “new” digital Gold, the new store of value asset, as it soared from March 2020 to March 2021. This became a self-fulfilling prophecy as Bitcoin reached new highs every day. As traders followed the greed and FOMO 100 percent+ gains in crypto assets, gold was considered as the stepchild, receiving no attention at all. Gold is currently up 6% year to date, while Bitcoin is down 25%. Is the story now different? report by samprotikee

People frequently confuse correlation with causation. The justification for it becomes stronger as the direction validates the initial assumption. Bitcoin’s halving cycle, which occurs every four years, has been its most compelling argument. Prices must naturally rise as supply decreases and demand increases. Furthermore, cryptocurrencies, particularly Bitcoin, were viewed as the new digital currency that would, in theory, replace the dollar whenever the Fiat system collapsed owing to its central bank’s inexhaustible money production whenever an economic downturn occurred.Gold not Bitcoin Is the Real Digital Safe

As true as this story may be, a large chunk of Bitcoin’s gain was fueled by the same unending money creation that worsened the currency’s fundamental trend. During the Covid crisis, the Fed’s balance sheet grew by almost $4 trillion, allowing it to invest in any hazardous assets. Bitcoin was one among them as well. The basic flow is difficult to distinguish from the larger picture macro flow, yet macro does play a role since top down rotation creates tailwinds. Even though Bitcoin was lauded as a fully diverse asset, the link between Bitcoin and the central bank balance sheet, or Nasdaq for that matter, is uncanny!

However, given the Fed’s excess liquidity, it also contributed to causality in this situation, because now that the market is pondering the end of Fed QE, technology stocks and Bitcoin have declined in recent months despite their “fundamental value.” In this light, it is possible to claim that Bitcoin is nothing more than a pure risk “on” and “off” asset.Gold not Bitcoin Is the Real Digital Safe

It is far from being a store of value, given its 50 percent -100 percent swings. If it were, Bitcoin would be soaring as Gold has all year during this moment of global instability and/or recession worries. However, it has plummeted to the level of one of the Cathy Woods (ARKK) names. Gold is finally outperforming the market in the way that one would expect. It’s not always about absolute performance; it’s more often about relative performance. Although gold has only increased by 6%, it has beaten most equities and wider indices by 25% to 80%. When it comes to capital preservation, sometimes it’s just as vital as producing returns, and Gold has done just that this year, preserving one’s profits and capital if they had monetized their gains.

Most asset classes have lost their basic significance as a result of the central banks’ MMT experiment, since excess liquidity has skewed their actual values. The Fed is currently dealing with a 7.5 percent year-over-year inflation rate and a $9 trillion balance sheet. The Fed should raise interest rates, but with such a large amount of debt, they are afraid of upsetting the market. The market is putting the Fed to the test, and it’s doing it for them by predicting nine rate rises this year alone. We know the Fed will not be able to raise rates that high before having to reverse course and soften policy once more.

Most people are trained to purchase the market because they feel the Powell “put” is still valid. There isn’t much the Fed can do here but hope and desire for rapid inflation. It’s a pity the Fed hasn’t even managed to raise interest rates by 25 basis points, and the market is already speculating on a bailout! One has to wonder what “tools” they will have to support the markets if we experience another repo crisis, or, dare I say, an outright economic recession, as we did in 2019.

Bitcoin was barely changed after hitting a low of $36,372 on Tuesday, when Russian President Vladimir Putin said that he is recognizing two self-proclaimed separatist republics in eastern Ukraine and has dispatched troops to the region. Other cryptocurrencies also varied as a result of the political unrest, with Ether falling as much as 3% before recovering, and XRP falling as much as 6.7 percent.Gold not Bitcoin Is the Real Digital Safe

Over the weekend, Bitcoin fell below $40,000 and continued to fall as the Ukraine situation worsened, contradicting the premise that cryptocurrencies are a safe haven in times of global uncertainty. Gold, on the other hand, has risen to its highest level since June.

“In the recent global tumult — the United States/Russia/Ukraine — Bitcoin, the asset touted to be the answer to all questions, has quietly declined and is markedly underperforming its arch-enemy, gold,” 22V Research’s John Roque said in a note on Monday.Gold not Bitcoin Is the Real Digital Safe

Read more: In an escalation of violence, Putin orders forces to separatist Ukraine areas.

As traders increasingly choose gold, Roque predicts Bitcoin will go below $30,000, a level it hasn’t touched since July, potentially driving bullion to an all-time high.

In an email, Nexo co-founder and managing partner Antoni Trenchev stated, “Bitcoin’s failure to maintain $40,000 amid heightened Ukraine tensions implies $30,000 is back in play.” “For the time being, geopolitics has supplanted inflation as the fundamental driver of traditional and crypto markets.”

Trenchev sees last summer’s lows of roughly $29,000 as a “final line in the sand,” but believes Bitcoin will remain at $30,000, where there is a lot of purchasing activity.

Eng samprotikee analysis, according to Katie Stockton, creator of Fairlead Strategies, is also not in Bitcoin’s favor. She predicted that the coin will face its next significant technical test at $27,200, which is now trading below a long-term support level of roughly $37,400.

Gold not Bitcoin Is the Real Digital Safe

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