Bitcoin and Gold Competitors Will Outperform as Fiat Currencies Fall
As inflation continues to ravage economies worldwide, fiat currencies are beginning to suffer the effects of devaluation. Assets such as Bitcoin and gold could be favored according to analysts.
According to Bloomberg Intelligence, the outlook for the rest of the decade favors assets such as Bitcoin and gold. Strategists compared the two to the rest of the commodity market as the end is in sight for the Federal Reserve’s aggressive tightening.
“Lower commodity and risk asset prices may be the only way out with deflationary implications, which should bolster the price of gold and its digital version, Bitcoin,” Bloomberg Intelligence senior commodities strategist Mike McGlone commented.
A cost of living crisis means that all but the very wealthy have less money to spend on investments like crypto or gold. But when the world finally emerges from this recession, they may be the most important investments.
Outperformed gold
McGlone added that with Fed tightening nearing the endgame, “risk vs. reward could tilt toward resuming Bitcoin’s sustained upward trajectory, especially relative to most commodities.”
He suggested that the nascent technology and asset sectors are top contenders to outperform gold in the long term after retreating to a solid support zone.
“Bitcoin-to-gold ratio of about 10x, which was first reached in 2017. In a world that is rapidly going digital, the benchmark crypto is a top competitor to ancient gold.”
The more volatile BTC has lost 57% since the start of the year, but gold is also down 11% over the same period. Zooming out to a longer-term two-year view shows that BTC is up 87%, while gold has lost almost 13%.
Furthermore, commodities could be weighed down by “supply-demand fundamentals and the aftereffects of aggressive central bank tightening,” McGlone noted.
Currency wars
Another factor to consider is the current currency problem as fiat currencies lose their value. On September 27, CNBC Crypto Trader Ran Neuner commented that investors will likely look to exit local currencies and that the dollar is overtraded – leaving one winner – BTC.
Popular market analyst Murad contributed to the sentiment states:
“They told you Bitcoin can’t be money because it’s too volatile. Meanwhile, the century-old British pound and Japanese yen are down -22% and -20% this year alone.”
Crypto markets remain ranged where they have been since mid-June, and the longer this extends, the stronger the support zone becomes. Total capitalization has reached $1 trillion again after a 4.4% increase in the last 24 hours.
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