Why Gold Could Outperform Bitcoin in a Downturn
As seasoned investors and financial experts around the world increasingly agree that the U.S. is headed for a recession, some asset classes may outperform others as the depression unfolds, according to Bloomberg senior commodities specialist Mike McGlone.
In particular, according to McGlone’s analysis, gold may be in a more favorable position compared to its flagship cryptocurrency, Bitcoin (BTC), during this recession, especially if it involves a decline in the stock market, as shown on a chart showing the 100-week moving moving average (MA) of both gold and Bitcoin, as the expert shared on the 7th of May.
As McGlone explained:
“Momentum and the tilt towards a US recession could give gold an edge over Bitcoin in 2023, especially if the stock market falls. The metal moving up versus down for the crypto is the current path on a 100-week basis, and the key question is what stops the trend.” »
Gold price analysis
Interestingly, gold earlier saw a strong move higher, to $2,052 an ounce, as the Federal Reserve raised interest rates by 25 basis points – to 5.25% – the highest level in more than two decades, signaling the correlation with rising interest rates, which Finball. reported May 4.
At press time, gold was trading at a price of $2023 per ounce, almost $30 lower than the peak from a few days ago, but still 0.74% or $17 higher than a month ago, according to the latest information Finbold obtained from platform BullionVault on the 8th of May.
Bitcoin price analysis
As for Bitcoin, the commodity expert has expressed his opinion that the first digital asset “sustaining resistance above $30,000 would be a first indication that the tide is turning for all cryptos, but the ceiling looks set to strengthen as of May 2 .”
“It is the higher correlation to the stock market and risk assets vs. gold that we see putting Bitcoin in a vulnerable position in early May,” he added.
In fact, at press time, Bitcoin was changing hands at $27,967, down 3.19% on the day and down 4.7% over the past week, while still posting a modest gain of 0.12% on the monthly chart, according to the last data retrieved. on the 8th of May.
Looking forward
Finally, as McGlone concluded, there is a “consensus for a soft landing and that the worst is over is similar in stocks and crypto, with the latter having a higher beta and tending to be a leading indicator. Bloomberg Economics’ recession forecast has moved towards July.”
Meanwhile, Société Générale strategist Albert Edwards has argued that “the official US leading indicator is telling us that a recession is a done deal, not tomorrow, not next week, but today,” which he believes will “lead to a collapse in margins and profit, ” and probably includes stocks, which are closely related to the company’s profit and earnings, which Insider reported May 6.
Disclaimer: The content of this page should not be considered investment advice. Investment is speculative. When you invest, your capital is at risk.
