Bitcoin (BTC), Gold shine as safe haven assets amid rising inflation

bitcoin gold inflation all rising
“Bitcoin (BTC), Gold shine as safe-haven assets amid rising inflation” Image by jpellgen (@1179_jp) via Flickr
  • Bitcoin and gold experienced increased demand as U.S. consumer price readings topped 30-year high levels.
  • Surprisingly, the U.S. dollar also gained strength, rising to levels not seen since July 2020.
  • BTC could top $146,000 in the long term, according to a JP Morgan analyst

JAIPUR (CoinChapter.com) – Bitcoin and gold scored brownie points as consumer prices in the United States reached levels not seen since 1990. The digital gold shot up to a new all-time high price of $69,000. Its traditional counterpart rallied to a 5-month high of $1,870 and still looks strong to log further gains.

Cautious investors assessed the latest U.S. Consumer Price Index (CPI) data which showed a 6.2% year-on-year (YoY) increase in October 2021. On a monthly scale, CPI increased 0.9% compared to September. Nonetheless, the sporadic rise in consumer prices came to haunt market participants as they looked for avenues to preserve the value of their wealth.

Related: Bitcoin heads towards $60K after U.S. inflation report shows another spike in consumer prices

Inflation Is Transitory? NONSENSE

Most of them, including notable economists, slammed the U.S. Federal Reserve’s ‘inflation is transitory’ narrative. They opined that the central bank and the U.S. government had failed to reign in ballooning prices of consumables and that their current efforts will only do so much to salvage the scenario.

“The Consumer Price Index (CPI) reached a 30-year high of 6.2% in October. Forget about the Fed’s “transitory” inflation NONSENSE, this rise in CPI will be persistent. The monetary bathtub is overflowing, and the incompetence of the Fed is to blame.”

said Steve Hanke, economist at Johns Hopkins University

“US crushed by an inflation crisis, energy crisis, supply chain crisis, employment crisis, border crisis (to name a few). In response, Dems planning to vote for a bill that spends trillions, taxes energy, offshores supply chains, pays people not to work & abolishes migration caps.”

noted Stephen Miller, founder of America First Legal

Although, the Fed, in the previous Federal Open Market Committee (FOMC) meeting on Wednesday, announced the scaling back of its $120 billion a month asset purchases citing higher consumer price pressures. But that didn’t deter Bitcoin and gold bulls from pushing both assets higher.

Related: Bitcoin rally weakens as Fed announces tapering $120B a month stimulus policy

Because the central bank plans to roll back its asset purchasing month by month while keeping interest rates near zero, the move appeared insipid as both XAU and BTC proponents suggested allocating funds to these two assets.

But Bitcoin Is Better Than Gold Says JP Morgan

JP Morgan analyst Nikolaos Panigirtzoglou in the investment banking giant’s inaugural alternative investments report predicted that Bitcoin price could top $146,000 in the long term. In the short term, though, the benchmark crypto-asset would hit $73,000, the analyst noted.

Mr. Panigirtzoglou added that Bitcoin’s reputation as an inflation hedge superseded that of gold.

“Bitcoin’s allure as an inflation hedge has perhaps been strengthened by the failure of gold to respond in recent weeks to heightened concerns over inflation.”

Rising outflows from Gold ETFs corroborate the JP Morgan analyst’s claim. Despite the yellow metal’s spot rates breaking out to multi-month highs, investor demand dampened due to sustained price declines in August and September.
While Asian markets contributed positively to global Gold ETF markets, outflows in European and North American markets nullified fund inflows.

“Gold-backed ETFs (gold ETFs)1 experienced net outflows of 25.5 tonnes (t) (-US$1.4bn, -0.7% AUM) in October. Outflows of near equal magnitude from Europe and North America were marginally offset by inflows in Asia. Global gold ETF holdings fell to 3,567t (US$203bn) during the month2 – notching year-to-date low levels – as investor appetite for gold diminished in the ETF space following price declines in August and September. “

Read the World Gold Council’s latest Monthly Gold ETF Report
Gold ETFs experienced outflows from North American and European markets
Gold ETFs experienced outflows from North American and European markets. Source: World Gold Council

That is because investment preferences amongst millennials have changed considerably, observed Mr. Panigirtzoglou. They now strongly prefer allocating a portion of their portfolios to cryptocurrencies, apart from stocks. And the same will trigger massive upside moves for Bitcoin soon.

“Considering how big the financial investment into gold is, any such crowding out of gold as an ‘alternative’ currency implies big upside for bitcoin over the long term.”

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