Gold and Bitcoin Are Heading for the Top
This has set up all kinds of questions that we haven’t really dealt with before, a big one being, “Are gold and bitcoin suddenly correlated?” As of late, the big question has been whether stocks and bitcoin are correlated, but present circumstances suggest that BTC and gold are more similar than originally thought. For all those who have called bitcoin the “digital version” of gold, the present situation probably isn’t anything special, but for everyone else, this is something to take seriously.
Bitcoin has been surging heavily as of late, with the currency nearly striking the $11,000 range for the first time in about one year. While bitcoin has jumped past $10K a few times during the past few months, the maneuvers haven’t really amounted much, and mere hours passed before the world’s number one cryptocurrency by market fell back into the $9,000 range.
However, bitcoin appears to be up and staying up at press time, and the same can be said for gold. The precious metal is on the verge of striking a new $2,000 high, and some analysts believe the precious metal could rally by an additional 20 percent. The asset had fallen to a lowly $1,300 during the height of the coronavirus pandemic but had since struck the $1,800 mark. It is now moving even further up the financial ladder.
It is widely thought that gold will potentially strike $2,300 per ounce by the beginning of next year.
Naturally, arguments are running amok about which is better: bitcoin or gold. Some, such as Ari Wald – the head of technical analysis at Oppenheimer – believes that gold is looking quite good at press time, but that bitcoin cannot be discounted. He appears split right down the middle, claiming:
We’ve been recommending gold as a means of playing the expansion of the [Federal Reserve’s] balance sheet. It’s the high momentum commodity. It ranks highest above all commodities out there in terms of momentum. We do recommend sticking with it, but I think it’s worthwhile to highlight bitcoin instead, which isn’t as extended. Bitcoin is reversing its downtrend dating back to its 2017 peak. If you are a long-term holder, this is the type of action you’d like to see.
Which Is Better?
Others, however, appear a little more skeptical when it comes to bitcoin. One figure – Michael Binger, president of Gradient Investments – is still advising traders to primarily consider gold over BTC, explaining:
Between the two, I would really lean on the gold side here. When you think bout it, it is really a Goldilocks environment for gold investors right now. I mean you have a weak US dollar and you have negative real interest rates. All of this is based on the prospect of rising inflation.