As a seasoned researcher with over two decades of experience in financial markets, I have seen my fair share of bull and bear cycles. The recent tweets by Mike McGlone, the Chief Commodity Strategist at Bloomberg Intelligence, have piqued my interest. While I respect his analysis, I am somewhat skeptical about his prediction for Bitcoin’s impending headwinds due to its underperformance against gold.
The leading strategist in commodities at Bloomberg Intelligence, Mike McGlone, recently posted his insights on Bitcoin, gold, and their shared traits with copper on a popular social media platform (previously known as Twitter).
Per his tweet, Bitcoin is underperforming gold so far.
Bitcoin surpassed by gold despite strong S&P 500
McGlone published two tweets, talking about Bitcoin and other commodities – gold and copper. Per him, Bitcoin has been lagging behind its physical rival gold even though the stock market currently remains strong. He refers to the S&P 500 index here that represents stocks.
In October, often referred to by crypto enthusiasts as “Uptober,” the value of one Bitcoin equaled approximately 24 troy ounces of gold for the first time in four years, as gold reached a new record high. This ratio is lower than it was in March (where 1 Bitcoin was worth around 34 ounces of gold) and even lower than the exchange rate from 2021 when one Bitcoin could be purchased using approximately 37 ounces of gold.
McGlone suggests that Bitcoin might encounter challenges ahead, given that the stock market currently maintains a fairly elevated position, and Bitcoin appears to be trending downward.
Gold Beating Bitcoin and Signaling Potential Risks for Risky Assets – #Bitcoin falling behind gold, even with the S&P 500 reaching new records, could indicate turbulence ahead for high-risk investments. On October 22, one ounce of bitcoin was equivalent to around 24 ounces of gold, a ratio that is lower than its March peak of 34 and its 2021 maximum.
— Mike McGlone (@mikemcglone11) October 23, 2024
According to a report by U.Today, Max Keiser, Bitcoin advisor to El Salvador’s president Nayib Bukele, predicts that the world’s leading cryptocurrency could soon hit the $220,000 mark. This is due to the fact that gold, another safe-haven asset, has reached a historic high, and Keiser believes Bitcoin will follow suit.
Bitcoin and copper’s mutual issue, per McGlone
McGlone noted an interesting comparison: Just like copper, Bitcoin appears to be facing challenges in the current booming stock market. Over the past 60 days, Bitcoin’s correlation with the S&P 500 has reached a record high. This implies that Bitcoin is currently acting more like a risky stock rather than serving as a unique safe haven.
In simpler terms, the strong link between Bitcoin and the S&P 500 over the past 60 days in a growing market, along with a comparable trend in copper prices, might imply that the increase in ‘beta’ (a measure of risk or volatility) is excessive. Individual technical patterns, however, should be closely monitored for confirmation.
— Mike McGlone (@mikemcglone11) October 23, 2024
McGlone suggests that for Bitcoin’s price growth to continue, its volatility should significantly escalate, implying an increase in Bitcoin’s sensitivity to market fluctuations similar to copper’s.
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2024-10-23 16:48