Bitcoin has behaved more like gold over the last 30 days, holding up better than stocks in that period. Jamie Dimon from JPMorgan and the US Federal Reserve (Fed) have warned about an imminent economic catastrophe, which BTC might help face.
The pioneering cryptocurrency might serve as a hedge against inflation if it decouples from stock markets. Bitcoin (BTC) remains more like spot gold than US stocks as the prices of services and products continue rising.
Over the last month, the price of Bitcoin has dropped by 3.11% while stocks have suffered much sharper losses. The S&P 500 index has fallen by 6.7%, the high-tech sector has had more significant losses, and the Nasdaq-100 index has dropped by 8.77%.
While the Correlation between BTC and Stocks Drops, Gold Rises
In contrast to stocks, Bitcoin has behaved more like gold over the last 30 days. While the global economy staggered, gold held up better in that period. Spot gold has dropped by only 1.27% to reach USD 1,643 an ounce. The price action gives credit to the digital gold thesis, at least for the time being.
The premise behind Bitcoin as a scarce digital asset indicates it can provide investors with a hedge against inflation. The cryptocurrency has the scarcity of gold, the portability of an e-mail, and the individual control and privacy of cash.
Earlier this year, Bobby Zagotta, the CEO of the Bitstamp cryptocurrency exchange, said that the above would happen. In March, he predicted that Bitcoin might start trading like gold in the short term. He commented it was only a matter of time before seeing how the asset becomes more mainstream, which has occurred.
This summer, the White House Office of Science and Technology Policy (OSTP) put cryptocurrencies on the table as a regulatory priority. While the Anthony Hopkins NFT Collection sold out in 7 seconds, Google’s Alphabet Inc. started accepting BTC as payment.
Bitcoin Might Serve as Hedge against Expected Inflation
Similarly to gold, Bitcoin might serve as a hedge against increasing inflation.
Financial news media outlets announce that an economic catastrophe will come. Jamie Dimon from JPMorgan and the US Federal Reserve (Fed), among others, have warned about a worse forthcoming recession. While the prices of services and products have skyrocketed, Bitcoin has held up better than stocks.
The price of Bitcoin increased 24 hours after the release of the latest Consumer Price Index data.
The markets believe that users can trust bitcoin more than bureaucracies, which the rest of the sectors must learn eventually.
The Winklevoss twins hope the price of Bitcoin will rise 25 times over the next ten years to be more than a hedge against inflation. The pioneering cryptocurrency might become the best-performing asset of the decade for the second consecutive year.
Meanwhile, Bitcoin is trading at around USD 19,614 and has accumulated a 1.8% gain over the last 24 hours. While its daily trading volume is above USD 24.51 billion, its market capitalization is about USD 376.24 billion, according to CoinGecko.
By Alexander Salazar
