Gold Plunges After Dow Records New High; Why Bitcoin May Rise
Thursday wasnt a great day for gold holders. During the days trading session, the precious metal cratered by its standards, falling by $23 — a 1.5% downward move — from $1,490 to $1,468 in a relatively spectacular fashion. This drop came a day after the asset shed $30, implying that a downtrend is forming for gold.
Bitcoin, on the other hand, was relatively stagnant, finding itself ranging at $9,200 for the umpteenth day in a row. And the U.S. stock market registered new highs, surging off news of an impending trade deal, relatively strong economic metrics, amongst other positive news.
Gold Plunges; Bitcoin to Follow?
If youve followed the crypto news cycle at all over the past few months, you know of the narrative that Bitcoin is digital gold. Earlier this year, it was all the rage, with charts displaying the eerily correlated performance of the two assets gaining traction on Twitter.
In fact, Quant Fiction, a markets researcher, found that Twitter users identifying as being a portfolio, fund, asset, or wealth manager, have published 100% more tweets mentioning both Bitcoin and risk-off/safe haven than at the start of the year.
Tweets mentioning Bitcoin with "safe haven"/"risk off" by users identifying as portfolio/fund/asset/wealth managers
Probably nothing pic.twitter.com/G2WGuJ697V
— Quant Fiction (@quantfiction) August 22, 2019
But, as aforementioned, Bitcoin has seemingly decoupled from gold, remaining effectively flat as the precious metal has seen its worst week in two years, according to this Bloomberg article.
So, the question remains: where does Bitcoin go from here, especially considering the backdrop of fresh all-time highs for U.S. equities and a tumbling gold? According to analysts, up and up.
Need for Alternative Assets Growing
While those that put their belief in the Bitcoin is a safe haven narrative would have you believe the cryptocurrency will follow gold, a Bloomberg analyst recently wrote that the macroeconomic backdrop is proving a need for quasi-currencies, like BTC. Per previous reports from NewsBTC, an excerpt from the latest update from Bloombergs monthly crypto market columnist reads:
Bitcoins maturation towards a digital version of gold, plus increasing institutional interest and a favorable macroeconomic environment for independent quasi-currencies, should keep a bid below the market.
Indeed, Ray Dalio, the co-founder of Bridgewater Associates, recently wrote that he thinks the worlds economy is rife with holes. These include but arent limited to extremely low, and even negative interest rates for the creditworthy, large government deficits that he believes are almost certain to increase substantially,