The impact of the economic crisis caused by the pandemic Covid-19, has opened up the possibility of a rally. The demand for gold and massive purchase of Bitcoin by large investors, it opens up the possibility for an increase of great proportions in these assets.
According to a published study by Bloomberg, the price of both Bitcoin and the Dollar have all conditions to discharge. The only way to explain that Bitcoin is not in bullish trend, it is that happen something extraordinary with the criptomoneda.
The same forces that support a possible rise in the price of Bitcoin, might be the same that will help the gold. According to various analysts, there are numerous factors that could fuel the rise.
Factors that could put the Gold and Bitcoin to a bullish rally
According to an article published in Forbes on the 25th of June, there are three main factors for the increase in the price of gold. These are, for a possible escalation of inflation in the price of the USD due to FED policies. Another factor is the uncertainty around the economy. Finally, there is the growing demand for physical gold.
The price of gold and Bitcoin, could be subserved by two of the three factors mentioned. However, there are others, for example, the fear of a second wave of the coronavirus, the possible new rates in Europe, the trade war between China and the united States among others.
This whole scenario, could be seen as the perfect storm. The above-mentioned analysis of Bloomberg ensures that the only way that the price does not shoot, is that “something really bad will happen to Bitcoin”.
The mass adoption of Bitcoin by institutional investors, maintains the positive indicators. The historical behavior of the price of Bitcoin indicates, according to the study, this year, his value should be around $20,000 per coin. The crisis of march may perhaps be the factor that until now has delayed this boom.
The price of gold, like the Bitcoin, come to a rally. In the case of the criptomoneda, its historical trend indicates a possible increase up to $20,000 USD. Source: Bloomberg
The policies of the FED with respect to the USD, the first engine of a possible rally
In a publication on the portal of Morgan Stanley, Lisa Shalett, CIO of this firm, ensures that the dollar could be near a peak. This could be the main force in the hypothetical rally in the historic price of gold and Bitcoin.
“If the dollar weakens, this may perhaps indicate a good time for some investors to consider adding some gold to their portfolios”, explains Shallet, quoted in the article. In the same way, Bloomberg believes that the large-scale purchase of Bitcoin, it is a clear signal that “we have a digital gold”, before the current circumstances.
However, some analysts believe that the fall of the USD is not a certainty. Meanwhile, the u.s. currency remains the dominant on the international markets.
The crisis caused by the measures related to the pandemic Covid-19, pushed the FED to make announcements exorbitant on the printing of money. Those statements remain just below the surface and threatening to investors. These are not taken to gambling their wealth, so they have to back them up in a safe asset. The gold and the Bitcoin, in this case, being the clear-cut elect to accomplish the task of shelter.
Growth of the appetite for gold and Bitcoin
The relaxation of the measures that impeded trade, have allowed the economy to start breathing again. At a slow pace, is still stabilizing. But supply chains are still suffering the consequences of the disruption, promoting commercial enterprises struggle to sustain their operations.
In that sense, Forbes cites Goldman Sachs as to the necessity of a reserve of value. “Historically, the demand for gold rises in the midst of the lack of clarity during the early stages of economic recoveries”.
In summary, we can consider that the start of a recovery, it may involve setbacks. Thus, the fear of a possible recession in the U.S. economy, leading investors to consider gold and Bitcoin as a safe haven.
The other factors mentioned above, feeding on the fears of investors. For example, the new measures of confinement close to Beijing, China, have set off alarms about a devastating second wave of coronavirus among already hit major economies of the world.
For its part, the trade war between the united States and China, it is a constant that hangs over investors. Attempts by the asian giant to counter sanctions from the US, such as the launch of its Central Bank, Digital Currency (CBDC), represent a serious challenge to the hegemony of the USD.
Increase purchase of Bitcoin by institutional investors. Source Grayscale
The gold and the main criptomoneda are becoming more similar
The comparisons between the gold and the Bitcoin, are a matter of great controversy. However, the same are undeniable, beyond the advantages and disadvantages of one over the other.
It can be said that there is an obvious correlation between the two with the fact that the same factors causing them similar results. From the beginning of the year, institutional investors have not stopped buying Bitcoin. The data of Grayscale are significant.
The growing demand of Bitcoin by institutional sectors, concludes Forbes, coincides with the increase of the correlation between this criptomoneda and gold.
Some data to take into consideration
According to analyst and crypto-researcher, Kevin Rooke, Grayscale added 53.588 BTC from the Halving of the past may 11.The historical performance of the Bitcoin in 2016, indicates that its price in 2020 should reach $20,000.The support base gold round $1.700 USD per ounce and the Bitcoin of $9,000 USD per coin.Compared with the oil and Nasdaq, the behavior of the Bitcoin is less volatile, unlike previous years. This represents maturity in the behavior of the criptomoneda and the acceptance of Bitcoin at the same level as the gold, on the part of investors.
The information of this content has been taken from reliable sources which are detailed below:
Professional management of content by the authors of CriptoTendencia.External sources: bloomberglp.com, Forbes.com and morganstanley.com.