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Bitcoin [BTC] now offers a higher yield than government bonds in 18 countries

Febin Jose



Source: Pixabay

Bitcoin has had an amazing first half of the month in May, as the coin registered significant gains to conquer the market. During the course of the month, Bitcoin managed to sustain its momentum and breached multiple resistances to trade at over $8,000, at press time. Relying more on investor sentiment and developments in the industry and less on technical indicators, the coin now sports a market cap over $100 billion.

Considering its domino effect on altcoins, it may come as no surprise that the king coin is now in close quarters to other real-world assets in terms of valuation and market impact. One of the real-world assets that have lost the race with Bitcoin is government bonds.

Pension Partners’ Charlie Bilello, who is also a prominent analyst and trader, recently tweeted that Bitcoin offered a higher yield than government bonds in 18 countries. Interestingly, the Central Banks of these 18 countries were also attempting to debase their currencies to inflate asset prices.

Most of the government bonds held a yield percentage in the negative range. Bitcoin’s yield percentage stood at 0%, making the cryptocurrency the effective winner.

Bilello also attached a Negative Bond Yield Matrix graph to drive home the point. According to the graph, while Bitcoin had a 0.00% yield rate over the 5-year and 10-year time frame, the yield rates of government bonds of quite a few countries were in the negative.

Source: Charlie Billelo/Twitter

Source: Charlie Bilello/Twitter

Over a 5-year time frame, Switzerland held a yield rate of -0.69, while Denmark and Germany held a yield rate of -0.49 and -0.48, respectively. Other countries which had a negative yield rate on their government bonds [5-year time frame] were Japan, Netherlands, France, Sweden, Finland, Belgium, Austria, Ireland, Slovakia, Spain, and Slovenia.

Over the 10-year time frame, Switzerland held a yield rate [of government bonds] of -0.36, while Germany and Japan held a yield rate of -0.07 and -0.05, respectively.

In both scenarios, Bitcoin was the winner, even though its yield rate was 0%.

On his Twitter thread, Bilello also mentioned that Bitcoin was up 112%, with respect to its year-to-date. He further tweeted,

Source: Twitter

Source: Twitter

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Febin Jose is a full-time journalist/editor at AMBCrypto. He believes that cryptocurrencies will navigate a volatile future and that Arsenal can still win a title. Lives around the "if it sounds like writing, I rewrite it" mantra.


JP Morgan: Big banks stand corrected as Bitcoin rally past intrinsic value; admits current surge mirrors 2017 rise




JP Morgan: Big bank stands corrected at Bitcoin rally past intrinsic value; admits current surge mirrors 2017 rise
Source: Pixabay

Big banks are riding a FOMO wave as the Bitcoin bull-run is just beginning. Spearheaded by the changing colors of JP Morgan, which recently forayed into the digital assets world, the banking elite is now suggesting that their initial stance on Bitcoin and the larger cryptocurrency world might have been off.

A recent chart by JP Morgan shows the current BTC price veer upwards chiding the “intrinsic value” the big bank placed on the virtual currency.

Based on the article by Bloomberg, the price of the coin would reverse towards the end of December 2018 and then make marginal gains until May 2019, all under the $5,000 mark. In reality, the BTC price, after dropping to “rock bottom” at just above $3,100 in early December 2018, edged upwards.

Several spurts of growth were seen in early January and February, prior to a massive April ascendance. On April 2, Bitcoin did away with the bank’s value mode and amassed a daily gain of over 15 percent, fuelling its current rise. Breaking the $5,000 ceiling in the process, which was pegged to remain intact well into May 2019, the king coin is now almost $3,000 ahead of the mark and is not looking to stop.

Source: Bloomberg

It should be noted that JP Morgan’s “intrinsic value” is calculated on the basis of the marginal cost of production, electricity prices, and hash rates. This model does not take into account, at least on absolute terms, the anticipatory effect of the 2020 halving, which, according to a slew of analysts is the behind the price rise.

Nikolaos Panigirtzoglou, the MD in the Global Market Strategy team at JP Morgan stated that Bitcoin breaking through its “intrinsic value” showed signs of mirroring its 2017 bull run. He evidenced this move by comparing the pre-December 2017 slump to the one seen prior to the current bullish swing.

The analyst added:

“Over the past few days, the actual price has moved sharply over marginal cost. This divergence between actual and intrinsic values carries some echoes of the spike higher in late 2017, and at the time this divergence was resolved mostly by a reduction in actual prices.”

With the analyst admitting that the imparting of an “intrinsic or fair value” to a cryptocurrency, much less a volatile one like Bitcoin, is a “challenging” ordeal, a mere JP Morgan acknowledgement of a Bitcoin bull-run is a remarkable sign for the digital assets industry, especially given the bank’s and its CEO Jamie Dimon’s Bitcoin-bashing in the past.

Mati Greenspan, senior market analyst at eToro attested to the same, adding a key point that JP Morgan failed to take into account in their calculation. He stated:

“Great to see JPM finally admitting that Bitcoin has intrinsic value.
Now wait till they understand that miners who run a surplus tend to begin hording.”

Despite Bitcoin slumping at press time, recording a 1.23 percent decline against the dollar, the prospects look positive. After recording a massive gain on 19 May, briefly surging past $8,000 for the second time in a week, Bitcoin created a High-Low [HL] at $7,100, which many analysts look at with glee.

This HL immediately following last week’s pull-back caused due to post-Consensus bears, a Bitstamp sell-order and market correction showed the king coin’s bullish persistence and can even be a foundation for a $9,000 ascendance, defying any “intrinsic value” expectations.

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