Financial experts believe Bitcoin can be a more reliable hedge against rising inflation and economic turbulence. And so shows history.
While being the leading cryptocurrency worldwide, BTC holds 50% of the entire value of the crypto market capitalization. Over the years, the token has been developing to eventually establish itself as the gold’s digital representative. Taking into account the rapid digitalization of the global economy, BTC looks like a more flexible asset. This fact makes it a better hedge against a weakening economy in the long run.
BTC is superior to gold for different reasons. The main one involves technological advances already adopted by leading global enterprises and financial institutions. In simpler words, we see the world turning into a digital environment where it is easy for money to interact with the Global Web.
Meanwhile, we should not ignore a strong connection between BTC and the yellow metal. While central banks actively purchase gold (77 tons only in August), almost half of all gold reserves serve as a financial instrument or mainly store value. The entire gold market currently accounts for $5trn.
As for Bitcoin, its market capitalization is $540 billion, which accounts for around 10% of the total physical and financial gold market capitalization. If the US-listed BTC ETF will eventually be approved, it can trigger a fundamental token flow of an extra $25 billion, which will result in a significant crypto price surge.
Additionally, cryptocurrencies provide a simpler value movement worldwide. In simpler words, users can effortlessly move the asset across borders despite the traded volume. What’s more, we should consider the current rate of technological development.
Digitalization is surging across all major industries. Having those future improvements in mind, BTC has all the chances not only to become a major speculative asset but also a store value akin to the yellow metal.
As for the historical data, we already say the BTC rallied back in 2019 after the FED concluded its rate-hiking cycle to make a pause. In this perspective, interest rate and the inverted yield curve are the two important factors to look for. The last one indicates impending recession.
What we see now is the reflection of 2019 with critical macroeconomic factors moving in the same direction. So, we can see the next BTC price rally shortly.
May the trading luck be with you!