Delta variant bullish for Bitcoin and gold says Bloomberg strategist

Bitcoin, BTC, USD, Gold
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  • Gains ahead for both BTC and gold, according to Mike McGlone, .
  • The effects of the last pandemic left USD on its knees, and Bitcoin with tremendous gains. Is the delta variant different?
  • BTC and GOLD daily charts. What are the prospects?

Yerevan (CoinChapter.com) – Bitcoin (BTC) and gold both promise to once again become a haven for investors and traders against the US dollar, as the new and highly contagious Delta Variant of the Covid-19 virus threatens to sweep across the US, targeting even mostly vaccinated areas.

Mike McGlone, a senior strategist at Bloomberg, tweeted his optimistic prognosis for both Bitcoin and gold in the event of a new pandemic. He primed them both as potential winners of the second half of 2021.

It looks like not only Mr. McGlone has a hunch of the upcoming crisis on the fiat market. According to Santiment, cryptocurrency data feed for investors. For example, bitcoin whales have accumulated more and more coins in the past two months after the crypto crash in May 2021. Whale accumulation is usually a good predictor of an upcoming price surge.

The inverse correlation between the US Dollar and Bitcoin became evident during the last pandemic. As a result, the US Dollar Index (DXY: a measure of USD strength against other fiat currencies) dropped drastically in 2020, going from 103 in March to 89 in late December (-13%). As the USD weakened, traders and investors searched for ways to hedge their assets and turned to digital currencies rather than gold.

BTC had a blast, logging a whopping 976 percent gain in the same period, going from $3,845 in March 2020 to $41,380 in December. However, the future is not unequivocal, as opinions differ on the status of USD during the possible delta variant wave.

Also read: US dollar gains strength as delta variant fears trigger bitcoin, gold market selloff.

Bullish phase for hedge assets?

As the Covid-19 wave raged across the globe in 2020, the US Federal Reserve opened the floodgates, causing much concern for rising inflation and subsequent loss of value. Stan Druckenmiller, the chief executive of Duquesne Family Office and an outspoken Bitcoin supporter, voiced his disapproval of the Federal Reserve’s fiscal policies back in May 2021.

He said the US dollar could lose its reserve status should the expansionary programs continue. However, as the economy got back on track and restrictions were gradually lifted, investors gained more confidence in the US Dollar.

Investors gaining confidence in USD. Source:  CFTC on FT.com
Investors are gaining confidence in USD. Source: CFTC on FT.com

As mentioned before, while the DXY strengthens, BTC tends to lose value. However, if the delta variant hits as hard as the first Covid-19 wave, crippling the economy once more, the repercussions for the USD could be severe. On the other hand, should the DXY decline, the digital asset sector and gold could yet again become a haven for investors worldwide.

Also read: 3 Bitcoin on-chain indicators infer bold bearish moves ahead

Meanwhile Bitcoin and Gold….

…flash different tendencies on the daily charts. Bitcoin traded in a descending channel from mid-May to July 24, when it finally broke out, briefly reaching $40,581. The BTC/USD exchange rate stood at $37,713 ahead of the New York session Tuesday.

The sudden surge was caused by a rumor that Amazon was preparing to accept crypto payments. The talk was officially denied, which led to a 10 percent decline. Overall, during the past week, the alpha crypto advanced by 26.7 percent.

Bitcoin daily chart. Source: BTCUSD on TradingView.com
Bitcoin daily chart. Source: BTCUSD on TradingView.com

The Gold vs. USD chart is not that optimistic as of yet. The historical haven lost 1.8 percent in price since July 16. The price for one ounce stood at $1,797 in the Tuesday session. However, the trading volumes (vertical bars at the bottom of the chart) are declining. Low trading volumes indicate the desire of investors to hold their gold instead of trading it for fiat or digital currencies.

Gold daily chart against USD. Source: GOLDUSD on TradingView.com
Gold daily chart against USD. Source: XAUUSD on TradingView.com

The upcoming months will tell if the digital asset sector can hold its ground in the face of the possible new delta variant pandemic. Gold seems to be in a similar position. However, in particular, the success or failure of Bitcoin in the 2H of 2021 could inversely depend on the government fiscal policies and the US Dollar Index.

Also read: Crypto market in limbo ahead of the tapering-oriented FOMC meeting.

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