Bitcoin Outpacing Gold

Bitcoin is up while Gold is trending down. Neither this post nor any other on cryptofal.com should be taken as financial advice. It is not.

• There are a few things that we can see on this chart that is made up of the prices of the S&P 500, Gold, and of course BTC. The first thing that we can see is that since March 12th Bitcoin has been on an upward trend while Gold has started to drop a bit. This could be due to the recent increase in interest rates announced by the fed as well as rising gas prices and inflation. This all scares people away from the US dollar because its purchasing power is being diminished by these factors.

• This could also be why we are seeing a spike in the S&P 500. With interest rates increasing people are looking for a way to make their money grow as opposed to being stretched thin by holding it in a bank. The same theory can be applied to why we may be seeing a spike in the price of Bitcoin.

• The other big thing that we can see on this chart is the long-term correlation between Bitcoin and the S&P 500. The fact that they are moving so similarly is a good and a bad thing. It is good because it is reacting to global issues, like the war between Russia and Ukraine, as well as having positive and negative reactions to interest rate news and fed talks. It shows that it is not just being moved by whales manipulating the market. What is not so good about this is that the main purpose of a decentralized network is that it is not affected by government policies; however, the price action correlates to the positive or negative news.

• Either way, it is a positive because there are more investors from the traditional markets getting involved in cryptocurrencies. Some of those people have been trading for years and they are carrying over their strategies that have worked on the stock market. This makes it a more legitimate investment and much less speculative when it is being traded the same as the SPX.