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#1 12-08-2019 08:52:09

johnedward
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From: Paris - France
Registered: 21-12-2009
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BTC/USD: the Bitcoin seems to be turning into a safe haven, why?

BTC/USD: the Bitcoin seems to be turning into a safe haven, why?


http://www.forex-central.net/forum/userimages/miner-bitcoin.JPG
The Bitcoin has been hesitating last week, consolidating between a lower limit at $11,300 and an upper limit at $12,200, and drawing a triangle that confirms indecision here.

This consolidation phase followed a weeklong rally that seemed in line with a rise in concerns about the China-USA trade war, while the stocks plunged worldwide.

This has led some to believe that Bitcoin is increasingly seen by investors as a safe haven.

Here are some factors that will help you decide whether Bitcoin is - or may soon become - a refuge asset.

Is the Bitcoin a new refuge?

As the US and other countries try to support economic growth through rate cuts, investors are beginning to flock to gold, cash, gov't bonds and now Bitcoin as a safe haven.

Former head of Goldman Sachs Raoul Paul explains why the world is quickly heading for a crisis in which Bitcoin is expected to come out on top.

"We are at the most important stage of the forex markets in my 25-year career. The dollar appears to be threatened by an uncontrolled rise."

He says that the Fed Broad Trade Weighted Dollar Index is about to break through the 130 threshold.

Meanwhile, the ADXY (Asian Dollar) index is about to fall below a crucial trend line. Paul claims that a decline of 25% or more in all major Asian currencies has put the index against what he calls the "cliff of death".

JP Morgan's emerging market currency index is also about to sink to a new low.

At least six other major currencies are also losing value. A strengthening dolalr is catalysing a massive global deflationary wave, which could lead to a major financial crisis. The positive side, however, is that this could be very good for the Bitcoin's price.

Pal concludes by saying that "unfortunately, we're at one of the most important stages in the history of economic markets. You just can't ignore the risk."

The central banks' monetary policies also support Bitcoin

Traders are becoming increasingly nervous as Central Banks have said they will continue to relax their policies. Two weeks ago, the FED said it would reduce interest rates and less than a week later, the Chinese devalued their own currency.

It is clear that CNY's price moves influence the price of the Bitcoin, which rose by over 13% recently. In addition, recent data shows that Bitcoin is the least correlated with traditional markets.

In addition, the Indian Reserve Bank also reduced its rates by 30 points. It should be noted that the Indian Central Bank rate seems to be inversely related to the Bitcoin price in recent years.

It is interesting to note that the rate increases appear to coincide with Bitcoin price lows and vice versa over the past several years.

Other analysts also agree that Bitcoin is increasingly appearing on the radar of investors looking for other tax refuges.

A few days ago, Anthony Pompliano, founder of Morgan Creek Digital, explained how Bitcoin will react to the current trend of global monetary easing.

Pompliano agrees that China's devaluation plays an important role in Bitcoins' current rise. He also adds that institutions are increasingly looking at Bitcoin because it has "proven to be uncorrelated and offers an asymmetric return compared to traditional assets".

However, Tom Lee, Fundstrat's director, believes that Bitcoin has decoupled from the dollar, which was the reason for the fall in prices last year, and "has taken on a negative correlation with the stock market".

It is therefore not surprising that BTC is increasingly correlated with gold while significantly outperforming both gold and silver and traditional stocks.

BTC/USD hourly chart:

http://www.forex-central.net/forum/userimages/BTCUSD-H1.png


"Anything worth having is worth going for - all the way." - J.R. Ewing

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