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Bitcoin’s price performance, correlation and long term holders analysis
On Tuesday, the 16th, President Joe Biden convened a second gathering at the White House with congressional leaders to discuss the debt ceiling. If lawmakers fail to take action before June 1, the United States faces the possibility of default and potentially severe economic consequences. The risk of a debt default in the United States is at an unprecedented level, posing a significant threat that could destabilize global markets and lead to substantial economic turmoil.
In such a situation, investors have limited options for protection, with gold emerging as the traditional and reliable hedge against potential losses. This article examines the potential of Bitcoin, acting as a digital equivalent of gold, to function as a secure refuge for investors seeking protection against economic instability.
Source: IntoTheBlock’s Capital Markets
At this time obtaining the protection of gold as a hedge comes at a higher cost, given its remarkable performance throughout the year. Initially fuelled by a banking sector crisis , and later on by risk of a US default, gold is presently hovering near its record high, showcasing its strong momentum. When it comes to safeguarding against the potential consequences of Washington’s high-stakes standoff regarding the debt ceiling, the precious metal remains the clear frontrunner for individuals seeking protection, should the situation result in a catastrophic outcome.
Bitcoin’s status as a digital representation of gold continues to attract interest among specific investors, driven by various significant elements. Bitcoin specific properties, like gold, are seen as a store of value and a hedge against economic uncertainties. Both gold and Bitcoin have limited supplies, which contributes to their perceived scarcity and potential for long-term value appreciation. In addition, Bitcoin’s decentralized nature and security provide a level of trust and resistance to manipulation, similar to gold’s historical reputation.
Source: IntoTheBlock’s Capital Markets
A positive correlation between the two assets indicates that their prices or values tend to move in the same direction. In this instance, we observe a rising correlation between Bitcoin and precious metals such as Gold and especially with Silver. When two assets have a positive correlation, it means that when one asset’s price or value increases, the other asset’s price or value also tends to increase. Similarly, when one asset’s price or value decreases, the other asset’s price or value also tends to decrease. This positive relationship suggests that the two assets are influenced by similar factors or market conditions.
The increasing adoption of Bitcoin by institutional investors and its long term holders is growing its recognition as a legitimate asset class further strengthening its comparison to gold as a reliable investment option. The Holders category refers to addresses that have retained possession of the asset for a period exceeding one year.
Source: IntoTheBlock’s Bitcoin Indicators
The expanding balance of long-term holders funds, further strengthens the notion of Bitcoin as a digital form of gold. The increasing group of long-term holders in Bitcoin reinforces the theory of it being regarded as digital gold because it aligns with the characteristics of gold as a long-term store of value. Just like gold, Bitcoin is being accumulated and held for extended periods, indicating a belief in its enduring worth. This trend highlights the perception of Bitcoin as a reliable asset for wealth preservation, similar to gold’s historical role.
The comparison between Bitcoin and gold as digital assets continues to gain traction among investors. The increasing adoption of Bitcoin by institutional investors, coupled with its recognition as a legitimate asset class, reinforces its positioning as a digital form of gold. The rising correlation between Bitcoin and precious metals such as gold and silver further supports this notion. Additionally, the growing population of long-term holders in Bitcoin aligns with the characteristics of gold as a reliable store of value. These factors contribute to the evolving narrative of Bitcoin as a potential digital equivalent to gold in the realm of investments.
Debt Ceiling Crisis &
Analysis of Bitcoin as Digital Gold was originally published in IntoTheBlock on Medium, where people are continuing the conversation by highlighting and responding to this story.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.