Yerevan (CoinChapter.com) – Gold price continued to rally as the inflation in the US crept north of 4 percent, invoking fear in investors and traders. Meanwhile, Bitcoin (BTC), the cryptocurrency that presented an effective hedge throughout the pandemic crisis in 2021, was still consolidating after the devastating crash since May 13.
The plunge was partially initiated by Tesla, the electric car mogul that ceased accepting BTC as payment for their vehicles. The crypto market cap further declined after May 19, when the People’s Bank of China banned all association with crypto, deeming it illegal.
The Central Bank of South Korea also voiced concerns about the volatility of the Bitcoin market, fearing financial losses. The institution pledged to monitor crypto transactions to make sure the average citizen is not subject to losses or fraud.
Bitcoin has yet to recover as it traded at $38,486 in the London session Thursday.
Institutional investors chose to secure their funds through shares invested through regulated Bitcoin derivative markets, which pose fewer risks. Grayscale Bitcoin Trust (GBTC), one of the major investment vehicles for institutions, suffered losses as its bids went down alongside BTC/USD spot rates.
While the crypto market counted its losses, investors no longer saw it as an effective way to secure against the growing inflation. They flocked to gold, the historically trusted source to hedge their assets. J.P Morgan, a US-based financial giant, also noted the change of flow back toward gold, and away from Bitcoin.
Gold vs inflation
The physical gold price has been rising since May 13, the very day the crypto crisis unfolded. It managed to gain 3 percent to date. Also, the treasured asset seemed to form an inverse correlation with Bitcoin. It had been declining throughout 2021 when Bitcoin soared in price. Many experts believe gold’s bullish trend is far from over.
Edward Moya, the senior market analyst at OANDA, a New York-based trading broker, voiced his opinion on the current gold rush. He asserted that the $1,950 per oz is not as high as the asset could rise. The analyst saw more bullish moves for the yellow metal in the future.
Gold was trading at $1,898 in the European session Thursday, with a relative strength index (RSI) around 70. The reading pointed that the asset is overbought and hinted a decline shortly is also possible.
Gold price rising, as Bitcoin failed to recover after the crash. Source: GOLD on TradingView.com
Investors’ fear of looming over inflation and growing national debt are among the factors that helped the golden bull, thinks Peter Grosskopf, the chief executive of Sprott, a global investment manager.
Meanwhile, the US dollar…
…is exhibiting worrying signs of decline. The US dollar index (DXY) approached its year-to-date low on May 25, only to correct slightly. The DXY curve on the chart below indicates the dollar’s strength against a basket of top fiat currencies worldwide.
With inflation on the rise, institutional investors sought a safe hedge for their funds. Many of them turned to Bitcoin throughout 2021, as the cryptocurrency was booming. However, considering the recent decline, they turned to a more stable asset for safety. Gold prices soared, and many experts believe the bull will not turn into a bear any time soon.
Lilit is a Yerevan-based Markets writer, skilled in 3 languages, and interested in writing about the tech world, trading, art, and science. She also has a background in psychology and marketing, which helps deliver the right message to the target audience.
Bitcoin (BTC) started the new weekly session in red, dropping by over 6% to below $32,000, its worst level...
Our Partners
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
Cookie
Duration
Description
cookielawinfo-checbox-analytics
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional
11 months
The cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance
11 months
This cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy
11 months
The cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.