BTC is an asymmetric bet and here’s a reason you should hold it
The most notable feature of Bitcoin has been its correlation with Gold and its potential as a value store. This account has been driving correlation and growth between BTC and Gold.
The relationship between the two assets has been growing recently and remains at 60% over 30 days. As this account gains power in the market, traditional investors are likely to hold the positions of Bitcoin and gold which may for the same reason protect themselves from market shocks. This could lead to Bitcoin and Gold having price movements similar to each other’s direction, as per report from Econometrics.
Comparison between 2008 and 2020
This account is significant in comparison with the financial crisis of 2008, when the Fed sheet grew by 150% and the downgrade plan forced growth by more than 400%.
By 2020, the Fed has already increased its balance by about 70%, while European Central Bank assets have grown by about 40%. The Bank of Japan was not far behind as its balance had risen by 20%, but it was on its way to continuous QE since 2013, so that did not surprise us.
When we analyses 2008 data and compare the growth of the central bank’s assets since then. The increase in balance has been with the Fed trying to address the problem of inflation, however, in the following year QE programs end up doing real damage in the form of declining commodity prices and a twisted financial market. Although the ECB and Fed tried to pull it off after 2008, it had no effect.
Bitcoin will separate from Gold
The story of ‘Bitcoin being better gold than gold’ will be confirmed when sometimes Bitcoin starts consuming the total value of the Gold market. This point will lead to the separation of two assets, currently, it’s is approximately 50x. This has been a huge gap and the potential for Bitcoin is huge, making it an unequal bet. However, as this issue is not yet too far-fetched for traders, it can provide an edge for long-term holders. Looking at the future Bitcoin looks promising. So are you ready to start your career as a cryptocurrency trader? Bitdenex gives a hassle free platform for trading with benefits from its referral program as well.