Earlier this week, Raoul Pal, attorney for Bitcoin (BTC) and CEO of Real Vision, said that gold is collapsing against BTC. If the dominant cryptocurrency continues to gain momentum versus BTC, this could strengthen its perception as a store of value.
Last month, the price of Bitcoin rose 30.36% against the US dollar, from $ 10,136 to $ 13,217. Over the same period, gold has gained about 2.25% from $ 1,863 to $ 1,903.
Why does Bitcoin outperform gold and stocks?
While Bitcoin price rebounded sharply in the past two weeks, both gold and the US stock market rebounded steadily.
The convergence of three main factors has likely contributed to Bitcoin’s rally since early October.
First, PayPal’s announcement of crypto integration has boosted market sentiment. Second, institutional demand for BTC has grown steadily after Square, MicroStrategy, and Stone Ridge’s investments. Third, Bitcoin’s affordable high-time frame log charts have sparked considerable optimism.
In particular, after the breakout above $ 12,000, bitcoin volume rose sharply in the spot, institutional, and derivatives markets. As a result, the digital asset outperformed most risky and high risk assets. Pal said:
“As expected, gold is collapsing compared to Bitcoin. Cc: @michael_saylor Everyone takes note. The next thing I expect is the correlations between BTC and the dollar and BTC versus stocks collapsing as well … let’s see. #Bitcoin. “
As Cointelegraph reported, when Bitcoin crossed the USD 12,000 resistance level, it marked a clean breakout on the weekly chart. Traders have begun to pinpoint the weekly and monthly log charts to predict a new all-time high.
Bitcoin’s strong technical momentum and its decoupling from gold and stocks may also fuel the intensity of BTC’s current rally.
In the short term, cryptocurrency technical analysts say Bitcoin is facing an identity crisis, but luckily in a good way.
Cantering Clark, a bitcoin and derivatives trader, said gold is under pressure when the dollar rises. The analyst said that because of the uncertainty as to whether it is a high-risk asset or a high-risk asset, BTC could see a lower correlation with the dollar. He wrote:
“Gold’s opponent is the dollar. If the $ DXY goes north, gold is under immediate pressure. The benefit of $ BTC is that the identity crisis still lingers, where some consider it an SOV and others a higher beta game for stocks. “
The trust of prominent investors is the cherry on top
As Bitcoin’s momentum continues to increase versus gold and stocks, prominent billionaire investors are advocating BTC.
Paul Tudor Jones, the Wall Street billionaire who bought Bitcoin in May, reiterated his positive stance on Bitcoin.
Hasu, a researcher who writes for the top cryptocurrency options exchange Deribit, quoted Tudor Jones as saying:
“I’ve never seen a store of value that you are in too [such] great intellectual capital behind it. […] If you are short selling the bond market as an inflation hedge, you are betting on human error rather than ingenuity. “