Mike McGlone believes that falling prices of commodities and risk assets should support the value of gold and Bitcoin. According to Ran Neuner, the depreciation of fiat currencies may lead investors to seek alternatives, leaving BTC as the winner.
Amid rising inflation worldwide, fiat currencies like the US dollar (USD) begin to suffer the effects of devaluation. According to a study, the beneficiaries of that situation could be the cryptocurrency Bitcoin (BTC) and the precious metal gold.
Bloomberg Intelligence forecasts that the outlook for the next ten years favors assets like Bitcoin and gold. The strategists compared them to other commodities, as the effects of the aggressive tightening by the Fed are in plain sight.
Mike McGlone believes that falling prices of commodities and risk assets could be the only solution with deflationary implications. The senior commodity strategist at Bloomberg Intelligence said this should support the value of gold and its digital version, Bitcoin.
A crisis in the cost of living implies that only the wealthiest have enough money to invest in cryptocurrencies or gold. However, those assets might become the preferred investments when the current global recession ends.
The Pioneering Cryptocurrency Outperforms Gold in the Long Term
McGlone also said that the tightening action by the US Federal Reserve is about to end. Therefore, the risks against rewards could lean toward the resumption of the sustained bullish trend of Bitcoin, mainly against most commodities.
The expert considers that the relatively new asset and technology sector may outperform gold in the long term. He highlighted that Bitcoin has already retreated to an area of solid support.
He recalled that the Bitcoin-to-gold ratio at around 10x first occurred in 2017. Besides, he pointed out that the cryptocurrency has become the biggest competitor to the precious metal in an increasingly digital world.
Since early 2022, BTC has depreciated by 57%, while gold has also dropped 11%. By detaching from a two-year long-term picture, BTC has risen by 87%, while the metal has fallen by nearly 13%.
Furthermore, the supply and demand fundamentals and the side effects of aggressive tightening by the Fed might weigh down commodities.
Bitcoin Wins the Battle against Fiat Cryptocurrencies
Another relevant factor to consider is that fiat currencies are losing their value. Ran Neuner, a CNBC crypto trader, said investors might seek local currencies while the US dollar overtrades, leaving BTC as the winner.
Well-known market analyst Murad commented that many believe Bitcoin cannot be money due to its volatility, adding to the sentiment. However, he highlighted that the British pound (GBP) and the Japanese yen (JPY) have dropped by 22% and 20% in 2022.
The overall crypto market has remained range bound since mid-June, which makes the support zone stronger as it spreads. The total capitalization reached USD 1 trillion again after accumulating a 4.4% gain over the last 24 hours.
Meanwhile, Bitcoin is trading at around USD 20,138 and has accumulated a 7.1% gain over the last 24 hours. While its daily trading volume is above USD 47.47 billion, its market capitalization is about USD 385.88 billion, according to CoinGecko.
By Alexander Salazar
