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While stock markets are withering and falling owing to the deep-set fears of a fresh pandemic spread and the wait for the stimulus package to roll on, there is one asset that has decided to decouple itself from the rest and perform.
Yes, we are talking about Bitcoin here and as per the observational data presented by Skew.com, the recent correlation between bitcoin and S&P 500 has dwindled to 13.7% in line with anecdotal observations. In addition to this, Bitcoin and gold seem to have caught up with each other with both the assets walking in tandem. But, Bitcoin’s performance has clearly outperformed Gold’s performance recently. Skew.com once again has enumerated that the correlation between Bitcoin and Gold has resurfaced from negative territory to 23% in October.
Bitcoin prices have shown a jump of 33% month-to-date as it traversed from $10,374 to $13,859. This is a significant march towards heightened investor confidence in Bitcoin which is why Raoul Paul from Global Macro Investor and Real Vision Group has strongly said that gold investors may soon change their preference to BTC following the true dominance. Raoul Pal has provided his stance because of a positive momentum experienced by Bitcoin.
But, not all institutions think this way because they see Bitcoin as a hedge against inflation. Hedge assets are not seen as money-making assets but rather protection or insurance against uncertainties that other assets pose. Bitcoin is seen as an effective hedge against inflation because it is believed that it is still at its nascent stage where its exchange ecosystem, mainstream adoption, and custodianship still has scope to grow.
Before Microstrategy announced its capture of Bitcoin, not many financial institutions announced in public about their Bitcoin allocation. Following this, other companies like Square and Stone Ridge came out and publicly declared their decision to acquire Bitcoin. Raoul Pal strongly suggests that with this momentum already living and existing, it is difficult to stay away from it.
“Bitcoin is eating the world… It has become a supermassive black hole that is sucking in everything around it and destroying it. This narrative is only going to grow over the next 18 months. You see, gold is breaking down versus bitcoin…and gold investors will flip to BTC,” said Pal.
Source: Bloomberg
The image above from Bloomberg shows how relative to Bitcoin, Gold’s performance is slowly fading down. Almost in awe of how Bitcoin is routing its way upwards, he further adds:
“Bitcoin’s performance is SO dominant and SO all-encompassing that it is going to suck in every single asset narrative dry and spit it out. Never before in my career have I seen a trade so dominant that holding any other assets makes almost no sense,” he explained.
Pal has told his followers and has requested the traders to keep tabs on Bitcoin because this is by far the best trade and investment opportunity he has found. He believes it has the power to provide every little person the chance to create wealth and has urged people to grab it.