As with most asset classes in the lead up to March 2020, Bitcoin prices cruised into the new year in 2020 racking up a 44% rise.
Like the Australian and global stock markets, BTC prices took fright at the extent of the global disaster that Covid-19 rapidly proved to become.
But while the S&P 500 index plunged by 33.7% before a floor was (at least temporarily) established, BTC went further, more than halving in price (down 53.2%).
For an asset that hangs its hat on non-correlation to the traded markets, it was an alarming fall.
However, since that March stabilisation, where the S&P 500 has rebounded by 28.3%, Bitcoin has streeted Wall Street in recovery terms, rocketing by 83%, to US$8,892.70.
Henrik Andersson, chief investment officer at Melbourne-based crypto-asset investment firm Apollo Capital, is not surprised by the resurgence of the cryptocurrency heavyweight, saying that several major factors are in bitcoins favour.
The first is that central banks around the world are printing an increasing amountof money, as they have to do given the wide-reaching macro-economic impacts of the Covid-19 pandemic, Andersson says.
That is not a new story, but no-one imagined the pandemic, and certainly no-one imagined the Federal Reserve enacting QE Infinity (Fed Chairman Jerome) Powell has signaled that the Fed will literally throw everything it can into efforts to turn around the slump in the worlds largest economy and prevent a global credit crunch. No-one imagined the Fed committing to unlimited quantitative easing, by buying not only Treasuries and municipal bonds but mortgage-backed securities and even corporate bonds.
While that is arguably what the Fed has to do to prevent an economic meltdown in the US, it is bad news for fiat money like the US dollar: the monetary base has to expand to previously unimaginable amounts, devaluing the currency.
Real stores of money as gold is traditionally seen to be are benefiting. And so will digital gold, which bitcoin is, says Andersson.
The other main fundamental factor is the halvening that occurred this week: this event means that the supply of new bitcoins drops in half, from 12.5 bitcoins per new block to just 6.25.
This is the third halvening of bitcoin: the process, which was written into the software protocol of bitcoin as the digital currency was being created 11 years ago, by a person, or persons, identifying themselves as Satoshi Nakamoto. The halvenings regularly (roughly every four years) constrict the supply of the digital asset: no more bitcoins will be created after the total number of bitcoin in existence hits 21 million.
Whoever Satoshi Nakamoto is, he, she, it or they had their now-traditional fun with this weeks halvening. At 5.23 am on Tuesday morning, block number 630,000 was mined. With it, the supply decreased from 12.5 bitcoins to 6.25 bitcoin per block. The last block in the previous epoch, block number 629,999 contained a message:
NYTimes 09/Apr/2020 With $2.3T Injection, Feds Plan Far Exceeds 2008 Rescue
This echoes Satoshis message from the bitcoin genesis block in 2009, that read:
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks
The crucial point to appreciate, says Andersson, is that with 87.5% of all Bitcoin now mined, it is becoming scarcer. He says this is in stark contrast to US M1 and M2. which are now growing on a three-month annualised basis at 73% and 39% respectively, the fastest rates since records began.
While quantitative easing goes nuts, bitcoin, in contrast, is going through a quantitative hardening, bringing its inflation down to around 1.8%, says Andersson. Because of this, an increasing number of major global investors are seeing bitcoin as digital gold, and as a hedge against the reckless monetary policy by central banks.
This process has been helped along, he says, by legendary hedge-fund investor Paul Tudor Jones, who revealed in a paper this month that he was buying bitcoin, to the extent of 1%2% of his portfolio.
That is the kind of allocation, Andersson says, about which an increasing number of financial advisers are talking to him. Up until now, most of the investors we have had have been family-office and high-net-worth clients. But many mainstream advisers are now investigating holding a bitcoin allocation as a part of a diversified portfolio, as an uncorrelated asset.
Andersson says the correlation that bitcoin showed in the Covid-19 Crash is well understood.
Its reasonably well-understood that there was a lot of leverage in the crypto markets, and a lot of that selling was tied to margin calls on other assets. Gold fell, too: in mid-March, the correlation of all assets came together, but that was really due to an unprecedented external factor the pandemic and the associated economic hit and that extreme event made all assets more correlated for some time, he says.
Golds correlation to equities rose sharply, as well. You really could not hide anywhere. BTC is typically negatively correlated to the S&P 500, but did shoot up to 0.6 during the Crash it is still at about 0.5%, but we expect that to come back down as we go forward.
With a year-to-date performance of +24.6%, compared to +12.5% for US$ Gold and 11.2% for the S&P 500 Index, he says bitcoin is back doing what it is supposed to do.
Bitcoin is the best-performing asset class at the moment. Its really tremendous to see such a renowned investor as Paul Tudor Jones saying that he is allocating up to 2% of his portfolio to Bitcoin, because it has such a strong upside.
Everyone understands that it is a super-volatile asset but it is starting to make sense for advisers to have a small allocation to crypto in a diversified portfolio. Andersson says. The narrative of Bitcoin being the digital equivalent of gold, and becoming a genuine member of the liquid alternatives asset class, is getting stronger.
This article was written by James Dunn, writer for Inside Adviser.
Amidst the COVID-19 confusion, some cloud-based companies are growing... FAST!
Meanwhile, industry researchers are valuing the entire cloud computing market at $US210 billion. If you ask me, it seems clear as day that this HUGE market is only going to get biggerin 2020 and beyond.
Our top investment analyst has just identified 3 growth stocks in a net cash position, with strong competitive forces... and obvious tailwinds at their back.
Claim your FREE investing report on our analyst's "3 best share ideas for the cloud revolution" when you create a free Rask Australia account.
Our report is 100% free and unlocks hundreds of hours of bonus content.
Simply click here to access the report.
Disclaimer and warning: The information on this website is general financial advice only. That means, the advice does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. If you dont know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. Please read ourTerms of ServiceandFinancial Services Guidebefore using this website.
Go here to see the original:
Is Bitcoin the digital equivalent of gold? - Rask Media
- Satoshi Nakamoto Definition | Investopedia - February 6th, 2018 [February 6th, 2018]
- Who is Satoshi Nakamoto, Cryptocurrency's Elusive Creator ... - March 2nd, 2018 [March 2nd, 2018]
- Self-proclaimed Satoshi Nakamoto sued for swindling $5 ... - March 2nd, 2018 [March 2nd, 2018]
- Bitcoin's Creator Satoshi Nakamoto Is Probably This ... - March 28th, 2018 [March 28th, 2018]
- Satoshi Nakamoto - Wikipedia - May 7th, 2018 [May 7th, 2018]
- Satoshi Nakamoto Known to CIA? FBI? Created by NSA? Search ... - August 21st, 2018 [August 21st, 2018]
- Satoshi Nakamoto, bitcoins enigmatic creator - Brain scan - September 6th, 2018 [September 6th, 2018]
- Bootstrapped Gavin: Satoshi Nakamotos identity revealed ... - September 6th, 2018 [September 6th, 2018]
- Satoshi Nakamoto was interested in joining Trons Atlas ... - September 14th, 2018 [September 14th, 2018]
- Satoshi Nakamoto Revealed Says UK Nonprofit Stylometry ... - October 9th, 2018 [October 9th, 2018]
- 2018 Who is Satoshi Nakamoto? Psychic Insights Michelle ... - October 28th, 2018 [October 28th, 2018]
- How bitcoin has failed to achieve Satoshi Nakamotos ... - November 6th, 2018 [November 6th, 2018]
- Satoshi Nakamoto Introduced Bitcoin 10 Years Ago ... - November 6th, 2018 [November 6th, 2018]
- Who Is Satoshi Nakamoto? - bitcoinplay.net - December 14th, 2018 [December 14th, 2018]
- Satoshi Nakamoto Finally Revealed! A Back-Of-The-Envelope ... - December 14th, 2018 [December 14th, 2018]
- The Incomplete List of People Speculated to Be Satoshi ... - January 6th, 2019 [January 6th, 2019]
- Satoshi Nakamoto's profile updated 2018! | Crypto Insider - January 6th, 2019 [January 6th, 2019]
- Bitcoin (BTC) Creator Satoshi Nakamoto More Powerful Than ... - January 6th, 2019 [January 6th, 2019]
- Who is Satoshi Nakamoto? - What is Bitcoin? - January 6th, 2019 [January 6th, 2019]
- Who is Satoshi Nakamoto? - Invest in Blockchain - January 6th, 2019 [January 6th, 2019]
- Fake Satoshi Nakamoto Craig Wright Rats Out Ethereum Trying ... - February 19th, 2019 [February 19th, 2019]
- Will The Real Satoshi Nakamoto Please Stand Up No, Sit Down ... - February 19th, 2019 [February 19th, 2019]
- Who Is Satoshi Nakamoto? The Top 4 Candidates Revealed ... - February 19th, 2019 [February 19th, 2019]
- Satoshi Nakamoto Person Of The Year - Business Insider - February 19th, 2019 [February 19th, 2019]
- Will The Real Satoshi Nakamoto Please Stand Up - bitcoinist.com - February 19th, 2019 [February 19th, 2019]
- From Dorian Nakamoto to Elon Musk: The Incomplete List of ... - February 19th, 2019 [February 19th, 2019]
- Satoshi Nakamoto May Have Considered a Bitcoin Kill Switch ... - March 22nd, 2019 [March 22nd, 2019]
- How Rich is Satoshi Nakamoto Today? - coincentral.com - March 22nd, 2019 [March 22nd, 2019]
- Who is Satoshi Nakamoto? - CCN - March 22nd, 2019 [March 22nd, 2019]
- Bitcoin's Creator Satoshi Nakamoto Is Probably This Unknown ... - March 22nd, 2019 [March 22nd, 2019]
- Satoshi Nakamoto: Who is Bitcoin's Mysterious Creator ... - March 22nd, 2019 [March 22nd, 2019]
- Satoshi Nakamoto May Have Considered a Bitcoin Kill Switch - March 22nd, 2019 [March 22nd, 2019]
- Who is Satoshi Nakamoto? We Look at The Possible Candidates ... - March 22nd, 2019 [March 22nd, 2019]
- New Information Heightens Satoshi Nakamoto Mystery - Bitcoin News - March 22nd, 2019 [March 22nd, 2019]
- Satoshi Nakamoto Mines Over 40% of Bitcoin Cash, Sparks ... - May 5th, 2019 [May 5th, 2019]
- Who is Satoshi Nakamoto? John McCafee Claims to Know And ... - May 5th, 2019 [May 5th, 2019]
- Back to the Satoshi Nakamoto Bitcoin affair - BBC News - May 5th, 2019 [May 5th, 2019]
- Bitcoin block size limit debate: An overview - Cryptopolitan - September 18th, 2019 [September 18th, 2019]
- Is it Legal to Invest in Bitcoins in India? Here's a Guide to Cryptocurrencies - News18 - September 18th, 2019 [September 18th, 2019]
- Someone just moved $1.4 billion in Bitcoin - ACS - September 18th, 2019 [September 18th, 2019]
- You Can Now Prove a Whole Blockchain With One Math Problem Really - CoinDesk - September 18th, 2019 [September 18th, 2019]
- Bitek CEO talks spreading Bitcoin SV news in Latin America - CoinGeek - September 18th, 2019 [September 18th, 2019]
- Are 18 months enough for SpaceChain's extraterrestrial blockchain network? - Cryptopolitan - September 19th, 2019 [September 19th, 2019]
- Bitcoin Will Surge to $20,000, States BitMEX Chief Executive After Fed Prints $53 Bln of QE - U.Today - September 19th, 2019 [September 19th, 2019]
- The Top 5 Cryptocurrency Exchanges - Asia Crypto Today - September 19th, 2019 [September 19th, 2019]
- Snowden Triumphs Bitcoin While US Govt Tries Book Earnings Seizure - CCN.com - September 19th, 2019 [September 19th, 2019]
- What Is Blockchain Technology? - The Crypto Coin Discovery - September 19th, 2019 [September 19th, 2019]
- US Arrests One of the First Ethereum Devs - ihodl.com - September 19th, 2019 [September 19th, 2019]
- Craig Wright Claims He Almost Settled the Case with the Kleiman's - ihodl.com - September 19th, 2019 [September 19th, 2019]
- Craig Wright to Negotiate for Settlement Over 1.1 Million Bitcoin Ownership Trial - CryptoNewsZ - September 19th, 2019 [September 19th, 2019]
- Social media site Tsu set to return - ZDNet - September 19th, 2019 [September 19th, 2019]
- OPINION: Institutional Trading Could Kill Crypto Exchanges - Markets Media - September 19th, 2019 [September 19th, 2019]
- Craig Wrights Hidden Treasures: Court Order to Unlock the Tulip Trust - Cointelegraph - September 19th, 2019 [September 19th, 2019]
- Five Reasons Satoshi Nakamoto Is Smarter than Mark Zuckerberg - CCN.com - September 19th, 2019 [September 19th, 2019]
- And Satoshis True Identity is - CCN.com - September 19th, 2019 [September 19th, 2019]
- Donald Trump or Prince William? New Bitcoin Father Theory - Coin Idol - October 2nd, 2019 [October 2nd, 2019]
- EPFL Researchers Invent Low-Cost Alternative to Bitcoin | Fintech Schweiz Digital Finance News - Fintechnews Switzerland - October 2nd, 2019 [October 2nd, 2019]
- How to think about the future of digital currency - The Next Web - October 2nd, 2019 [October 2nd, 2019]
- Regulators Must Have Died and Made Crypto Exchanges King - CCN.com - October 2nd, 2019 [October 2nd, 2019]
- Bitcoin Price to Hit $90,000 After May 2020 Halving, Predicts Germany's Top... - Coinspeaker - October 2nd, 2019 [October 2nd, 2019]
- Block.ones SEC settlement over EOS ICO is shockingly weak say critics - Decrypt - October 2nd, 2019 [October 2nd, 2019]
- Bitcoin has a massive carbon footprint. This clever new cryptocurrency doesnt - Digital Trends - October 2nd, 2019 [October 2nd, 2019]
- John McAfee on Libra, Satoshi Nakamoto, and the Binance Ban [BeInCrypto Interview] - BeInCrypto - October 2nd, 2019 [October 2nd, 2019]
- AI, The Great Depression And Satoshi Nakamoto: Robert Shillers Narrative Economics Is A Cautionary Tale For Our Times - Forbes - October 2nd, 2019 [October 2nd, 2019]
- Analyzing the Bitcoin Phenomenon - ChartAttack - October 12th, 2019 [October 12th, 2019]
- Latest cryptocurrency news and prices, 09 October 2019 - The South African - October 12th, 2019 [October 12th, 2019]
- Alipay Claps Back at Binance, Reaffirms Ban on Bitcoin & Other Cryptocurrencies - BlockPublisher - October 12th, 2019 [October 12th, 2019]
- Bitcoin Association and Cambridge Partner Over Bitcoin SV - Live Bitcoin News - October 12th, 2019 [October 12th, 2019]
- How Bitcoin Miners Fueled the Bear Market Trend of 2018 - BTCNN - October 12th, 2019 [October 12th, 2019]
- Bitfinex and Tether Face Class Action Filed by Lawyers Who Sued Craig Wright - CryptoGlobe - October 12th, 2019 [October 12th, 2019]
- Cryptocurrency: What to know about digital money - Fox Business - October 12th, 2019 [October 12th, 2019]
- Bitcoin History Part 18: The First Bitcoin Wallet - Bitcoin News - October 12th, 2019 [October 12th, 2019]
- 2 Bitcoin Developers Explain How The Cryptocurrency Could Still Fail - Forbes - October 12th, 2019 [October 12th, 2019]
- With 18 Million Bitcoins Mined, How Hard Is That 21 Million Limit? - CoinDesk - October 25th, 2019 [October 25th, 2019]
- Wonders Of The Blockchain-Enabled Supply Chain - Coinrevolution.com - October 25th, 2019 [October 25th, 2019]
- Oxford English Dictionary Recognizes Growing Adoption of Crypto by Adding 'Satoshi' - CryptoGlobe - October 25th, 2019 [October 25th, 2019]
- Bitcoin moves towards the foresight of inventor Satoshi Nakamoto - OBN - October 25th, 2019 [October 25th, 2019]
- Jack Dorsey: Bitcoin is becoming the Internets national currency - Decrypt - October 25th, 2019 [October 25th, 2019]
- Exclusive Interview with John McAfee: Epstein Didnt Kill Himself, Bitcoin to Hit $1 million, & Rus - U.Today - November 25th, 2019 [November 25th, 2019]
- More than just crypto: blockchain usage grows amidst greater regulation - Bobsguide - November 25th, 2019 [November 25th, 2019]