Bitcoin Flirts With Price Surge as Gold Hits 9-Year High, Investors Hedge Against Inflation

The global economic impact of the COVID-19 pandemic stalled traditional markets and weighed down Bitcoin volume, contributing to months of price stagnation. With gold reaching values not seen in over a decade and investor capital flooding crypto markets, however, a BTC price surge could be just around the corner.

The financial consequences of the COVID-19 pandemic has seen governments and central banks around the world print billions in fiat currency in order to bolster economic activity — to date, the US Government has printed over $3 trillion USD, while the UK Government has executed a £100 billion quantitative easing plan.

While these measures are argued as a necessity in order to maintain economic stability, the issuance of new fiat currency inevitably presents the possibility of inflation. Large-scale quantitative easing efforts as executed by international governments throughout the first half of 2020 will have a profound impact on the global economy — a fact that cautious investors are aware of.

Inflation Fear Drives Capital to BTC Market

The threat of inflation presented by qualitative easing-induced inflation has catalyzed renewed interest in gold markets, driving the value of gold to a nine-year high of over $1,800 per ounce. Macro analyst Holger Holger Zschaepitz cites a decline in real inflation adjusted yields offered by US bonds, with investors shifting capital into gold as an inflation hedge.

While Bitcoin has yet to demonstrate a concrete return to a bullish trend, the shift toward assets that resist inflation has driven attention, once again, toward Bitcoin. 

Earlier this month Argentinian Bitcoin traders pushed over $1.4 million USD into the Bitcoin market, doubling trade volumes on a weekly basis ahead of an economic crisis in the country driven by political turbulence and inflation approaching 50 percent.

The ongoing stability of Bitcoin — which has not strayed from the $9,000 to $10,000 range for several months — is redefining the market perception of digital assets, strengthening the position of Bitcoin as a hedging asset among traditional finance investors and placing Bitcoin in a secure position to challenge the $10,000 ceiling.