Bitcoin since its inception has been a speculative asset that has subsequently been widely traded. However, perhaps the most important thing to come out of Bitcoin aging is it being an uncorrelated asset. This means that Bitcoin’s price will not be negatively affected by global political and economic events, like recessions or trade wars.
The ongoing trade war between the U.S. and China has undermined the U.S. Dollar’s status as a global reserve currency. Additionally, this has also caused China to dump U.S. bonds and other assets.
The above, and the Fed’s interest rate manipulation has created more panic. Further, as suggested by Trace Mayer, other problems with the U.S. Dollar like the “yield curve,” “interest rates,” “trade wars,” etc. have all pushed people to invest in safer assets, the value of which will not be affected.
Trace Mayer tweeted,
“With $gold & $BTC rallies, perhaps look at $USD’s problems like yield curve, interest rate, trade wars, tariffs, etc. Plus, Chinese bank failures, negative yielding Euro debt & emerging markets getting whacked. #Bitcoin perfectly designed for this environment. 👍”
The above chart shows an inverted US treasury chart vs. Bitcoin, the chart being an apt example for “a picture is worth thousand words.”
Bitcoin has been rising dramatically over the last few months, further highlighting the end of the crypto-winter. However, there isn’t a lot of data to back up the reason for this rally or the increase in Google trends. Mayer’s tweet suggests that this is happening due to people trying to escape the worsening condition of the U.S. Dollar and other assets by investing in safe-haven assets like Gold and Bitcoin. Although speculative, this partially explains Bitcoin’s rally which saw the coin breaching the $10,000 mark, and even breaching $11k briefly.
However, most people in the community speculate that this rally is a sucker’s rally and that the price will eventually fall and correct itself.
A Twitter user, @Richarhilger, commented,
“Amazing correlation. Thank you to you both for your tireless work in this space!”
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