Despite the current market uncertainties some pundits point to gold and Bitcoin (BTC) as suitable hedges against future downturns. BTC remains of the best performing assets, maintaining its decoupling from mainstream stocks.
Bitcoin and Gold as Hedge Against Uncertainties
According to June 2020 Bloomberg Commodity Outlook, Bitcoin and gold will remain unaffected by any significant shakeups in the mainstream stock market arena. Numerous analysts point to both assets as safe-havens against upheavals in the broader financial sector.
An excerpt from the Bloomberg market outlook reads:
“Among the few assets up in this tumultuous year, gold and Bitcoin are building foundations for further price appreciation, in our view. The metal and the crypto remain our top candidates to advance in 2020, with added rally fuel from Covid-19.”
Indeed, the World Health Organization (WHO) characterizing COVID-19 as a pandemic back in mid-March sent markets into a tailspin. Bitcoin lost close to 50 percent of its value in a flash crash that took its price down to $3,800. This decline led to a few weeks of a positive correlation between Bitcoin and stocks but there has since been a massive decoupling betwixt the pair.
The largest crypto by market capitalization has since recovered from the drop, almost tripling in value in the three months since Black Thursday. For Bloomberg, gold staying above the $1,700 mark would mean the precious metal can stage a significant upward price trajectory for 2020.
According to Bloomberg, any further stock market stress will strengthen the bullish narrative for both BTC and gold. For now, U.S. stock market indices are in the green on the back of nonstop quantitative easing by the Federal Reserve.
Evidence for BTC’s Haven Asset Narrative
Despite the Black Thursday BTC price plunge, data suggests Bitcoin holders are still confident of the value proposition of their ‘coins.’ As previously reported by BTCManager, about 60 percent of Bitcoin’s total supply hasn’t moved in one year suggesting a widespread “HODL” strategy.
Apart from HODLing, Bitcoin proponents also appear to be ‘stacking sats’ with retail purchasing on the rise. This trend has resulted in the continued increase in wallets holding at least 0.01 BTC and 0.1 BTC.