Earlier in the week, Real Vision Group CEO and advocate Raoul Pal said that gold is ‘breaking down’ against Bitcoin. That could be a signal that the bullish case for BTC continues to gain ground. If the flagship crypto, bitcoin, continues to gain momentum against gold, it might strengthen its perception as a store of value.
In September, the bitcoin price gained about 30.36% against the US dollar rising from $10,136 to $13,217. At the same time, gold gained almost 2.25%, surging from $1,863 to $1,903.
Gold slumps against Bitcoin. Source: Raoul Pal, Bloomberg
Here Is why BTC Is Outperforming Gold And Stocks
In the last two weeks, while Bitcoin rallied strongly, both gold and the United States stock market steadily recovered. The meet up of three major factors likely contributed to the surge of Bitcoin since early October.
For starters, PayPal’s cryptocurrency integration announcement underpinned market sentiment. Secondly, the institutional demand for bitcoin has continuously increased after MicroStrategy, Square, and Stone Ridge’s investment. Finally, Bitcoin’s favorable high time frame log charts have brought up considerable optimism.
Mostly, after its breakout beyond $12,000, the volume of BTC across the spot, institutional, and derivatives crypto market spiked. Eventually, the digital asset started outperforming most risk-off and risk-on assets. Pal said:
“Gold is breaking down versus bitcoin, as expected cc: @michael_saylor Everyone take note. The next thing I’m expecting is the correlations between BTC and the dollar and BTC vs equities to break down too… let’s see. #Bitcoin.”
According to the previous reports, when BTC surged past the $12K resistance zone, it marked a clean breakout on the weekly charts. Currently, the traders have begun o pinpoint weekly and monthly log charts to forecast a new all-time high.
The strong technical momentum of BTC and it is somewhat decoupling from gold and stocks are also probably increasing the intensity of BTC’s current rally. In the near term, crypto technical analysts believe that Bitcoin is encountering an identity crisis, but fortunately in a good way.
One Bitcoin and derivatives trader, Cantering Clark, explained that gold is under increasing pressure when the dollar goes up. The analyst added that for bitcoin, due to the looming uncertainty on whether it is a risk-off or a risk-on asset, it might see a lower correlation with the US dollar. He wrote:
“Gold’s adversary is the dollar, if the $DXY heads north, Gold is immediately under pressure. $BTC has the benefit of having the identity crisis still, where some see it as an SOV, and some see it has a higher beta play on equities.”
Prominent Investors Add Their Voice
As bitcoin continues to gain momentum against stocks and gold, several prominent billionaire investors and major institutions are making their support for bitcoin known publicly.
Paul Tudor Jones is a Wall Street billionaire investor who acquired Bitcoin in May. Since then, he has reaffirmed his positive stance around the flagship cryptocurrency. One researcher quoted Tudor Jones saying:
“I’ve never seen a store of value where you also have [such] great intellectual capital behind it. […] When you short the bond market as an inflation hedge you’re really betting on the fallacy of mankind rather than its ingenuity.”