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Bitcoin’s Price Downturns Prevent It From Becoming Viable Hedge Asset: Research

  • Alex Morris
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    Real gold turns out to be a much better solution than Bitcoin, which is deemed to be digital gold


Bitcoin’s Price Downturns Prevent It From Becoming Viable Hedge Asset: Research
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Contents

Bitcoin as a store of value is one of the major talking points of the coin’s proponents. However, the ‘digital gold’ narrative has been recently disrupted by JPMorgan’s John Normand, who told Bloomberg that the OG coin doesn’t hold a candle to traditional hedges.

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A pointless use case?

The reason why actual gold is perceived as a traditional hedge is rooted in its limited supply, and, historically, people have always been fond of this metal (yes, it’s shiny!). However, the real utility of gold is rather minuscule – only 15 percent of gold is used in various industries.

Hence, gold is only valuable because we believe it’s valuable. With Bitcoin, the situation could be drastically different. Since 2010, the ten worst monthly performances for the S&P 500 also resulted in a negative return for Bitcoin, with mammoth-sized losses in August 2011 and September 2011.
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Zero correlation

Normand also points out that the correlation between the stock market and Bitcoin was almost non-existent throughout 2018. By following that logic, if the market goes down, the flagship currency could be seen as a good store of value. Nevertheless, it’s not relevant when it comes to hedge assets that are also caught in a death spiral.

Meanwhile, Bitcoin has recently reached its six-week low, also marking the lowest point in 2019 with an intra-day low of $3,396.


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Bitcoin's April 2 Breakout Was Reportedly Orchestrated by One Trader


Bitcoin's April 2 Breakout Was Reportedly Orchestrated by One Trader
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It’s been over two weeks since Bitcoin’s astronomical surge on Apr. 2, but new theories about what might have caused this bullish uptick continue to pop up. According to crypto-oriented analytical firm CoinMetrics, that epic surge was causes by a single trader.

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Mammoth-size trades

CoinMetrics claims that ‘a single committed trader’ concocted a plan to push the BTC price, and he successfully managed to do that by picking the time of the day when the global liquidity is at its lowest level.


(Source: CoinMetrics.io)

(Source: CoinMetrics.io)  

The report also suggests that the trader started to execute his plan on HitBTC (500,000 USDT were traded for Bitcoin prior to the price movement). After that, large trades were observed on Coinbase and Bitfinex.      

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Focusing on the future

Meanwhile, as reported by U.Today, another theory states that the rapid price surge was triggered by the expiration of the CME futures contracts and heavy spot and over-the-counter buying. One expert went as far as claiming that a simple April joke about the Securities Exchange Commission (SEC) could do the trick.

While no one is quite sure about what could have triggered the short-living rally, there is even a bigger disconnect when it comes to Bitcoin price predictions. While some share their bullish predictions for 2019, another report states that it could take 22 years for Bitcoin in order to match its current ATH of $20,000.

'Bitcoin symbol and graph.Vector illustration.' image by 123rf https://ru.123rf.com/photo_69329295_bitcoin-symbol-and-graph-vector-illustration-.html?term=bitcoin&vti=njv6v7w01tymanucm1-1-82
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