A lot of institutional investors are holding BTC has a hedge against inflation. With the value of the dollar rising some of these institutional investors are seeing this as a sign that inflation is not rising as expected.
Gold is also falling because it also is a hedge against inflation. However, gold is down less than a percent. The driving factor for this difference is a combination of profit taking, momentum investing, and algorithmic trading. Momentum investors favor BTC over gold because gold is not as volatile. The less volatile nature of gold however makes it a good tool as a hedge against inflation and as a store of wealth.
Gold and BTC are partial substitutes and that might be why gold is only down slightly because there is some rotation out of BTC and into gold as people are profit taking, but still bearish on the dollar as whole.
What you want to look for is if gold and BTC are moving in opposite directions and the magnitude of their negative and positive correlations. You also want to note the time period. In the short run it is possible that they will move in opposite direction, but in the medium term they will trend in the same direction if they are loose substitutes.
This key difference highlights the risk in treating BTC like its gold. That has been a narrative in the hedge fund industry which helped to drive the rally in BTC over the last month, but from today's news you can see that they aren't perfect substitutes.
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Peter Schiff would absolutely love this article, that's for sure lol
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Thanks for reblogging it!
What is this poshbot thing?
:point_down:
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Everytime your post gets shared by someone on Twitter (in this case, me) you get notified by posh bot. You also receive POSH(proof of share) tokens from any activity relating to that tweet. There's a registration process somewhere, you'd find it if you click around.
!ENGAGE 50
Everyday, I keep learning more from you!
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Always a pleasure to help. Whenever you're free, checkout the Leodex and Hive-engine to see all the hive based tokens. Just like Leo, there are a bunch of other platforms that give extra incentive for your post and you can trade their tokens there.
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Awesome, I need to learn how to use the Leodex and become more advanced. Have you used the @tipu thing? I see it in a lot of post.
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Tipu is slightly different from engage. Some people are tipu curators and so just the way I summon engage bot to reward your comment, they can summon tipu bot to upvote your post
ENGAGEtokens.