Is Bitcoin The Place To Be In A Volatile Market

Many investors have called Bitcoin the digital version of gold. Obviously, we know it is in a lot of ways the digital version of cash, but the comparison to gold would potentially mean that if the stock market continues to be volatile or potentially crash, then Bitcoin would be an excellent place to be invested.

However, while someday Bitcoin may genuinely be the digital version of gold, it is not yet trading as such, I’ll explain in a moment, and therefore is not likely the best place to be parking your cash while the stock markets decide which direction it wants to go.

A simple chart of with the price of Gold and the price of Bitcoin overlaid on top of each other, clearly shows the two investments have not moved side-by-side over the past year, let alone the past month when the stock has been flipping from trading lower by 1% to trading higher by the same amount every few days. Since August 8th, 2018 Bitcoin and Gold have moved in the same direction at the same time just 51% of the time. Not really movements or assets that I would call correlated. Although, since May 8th, 2019, around the time we started seeing an uptick in volatility in the stock market, the two assets have been moving in sync 58%. Still not a sign of strong correlation, but better than before and a sign that someday, Bitcoin and Gold may move much closer together.

At this time, though there are just too many unknowns with the future of Bitcoin from both a legal standpoint and an adoption standpoint for it to trade hand-in-hand with Gold.

First and foremost, Bitcoin is illegal in a handful of countries around the world. China is the largest anti-crypto country, but the list also includes Algeria, Egypt, Morocco, Bolivia, Colombia, Ecuador, Saudi Arabia, Iran, Bangladesh, Nepal, Pakistan, Cambodia, and Indonesia. Continue reading "Is Bitcoin The Place To Be In A Volatile Market"