Analysis of the trend of gold and bitcoin in the first half of 2019 – Who is the king of risk?

Some experts say that bitcoin is "digital gold" or "new" gold. The comparison of these two assets has also been raised in recent years.

As early as 1998, Buffett once said that gold itself has no value. Also stated at the beginning of 2019, “The blockchain is important, but Bitcoin has no unique value. Bitcoin is essentially an illusion.” But in fact, at the current price, gold has risen in the past 20 years. 389%; Bitcoin rose 2400% in more than seven years. This year, Bitcoin has risen nearly 300%. In terms of the increase, Bitcoin can be said to be a victory. Especially in the past year, Bitcoin's investment risk aversion has gradually emerged.

In three ways, Bitcoin also has the value, risk aversion and security that gold has.

One. Rarity. Gold, rare precious metals. The total amount of gold detected in the world is about 1.7 million tons. At present, 160,000 tons have been mined, and about 0.2 million tons are mined every year. The total amount is fixed and cannot be issued. There are also many restrictions on mining. On the other hand, the total amount of Bitcoin is also fixed, the total will always be limited to 21 million, and the current total supply is 18 million.

Second, decentralization . Gold is distributed in the hands of banks and people in various countries, and there are no issuers. Similarly, Bitcoin does not have a central server such as a banking institution, nor is it controlled by any country, institution or individual. The price of gold and bitcoin is entirely determined by the market.

Third, can not be changed. Gold has strong chemical stability and cannot be dissolved in any strong acid or alkali, so it can be stored for thousands of years without damage. Bitcoin, which is highly network-dependent, is difficult to receive attacks from individuals and organizations. To control 51% of the computing power of the Bitcoin network, the amount of CPU/GPU required will be an astronomical number.

Bitcoin continued to fluctuate downward after experiencing a sharp rise in 2017. At the end of 2018, steady price increases began, and began to rise steadily in 2019, and in a few paragraphs, it is very similar to the price trend of gold.

Putting the price of gold and bitcoin in the first half of 2019 together, it can be clearly seen that there are some synchronizations in the three major stages.

The chart above shows the daily chart of the price trend of gold and bitcoin (the reddish vertical line on the left is the beginning of 2019, and the price on the right is the price of gold)

Before April 2, 2019, the price trend of Bitcoin was basically stable, but gold has obviously experienced several ups and downs.

The first is the price increase from January 25 to 31 . Gold received five yang candles and the price rose by $46 in five days: January 25 was the 35th day of the US government's lockout. In the evening of local time, Trump signed a temporary spending bill to end the government's closure. The longest government closure in history officially ended.

On the same day, according to the Wall Street Journal, the top decision-makers of the Fed are considering ending the quantitative tightening policy ahead of schedule.

On January 29, the US Department of Justice announced that the United States would file 23 counts against Huawei. The tension in the global trade situation has reached new heights. Therefore, multiple news has contributed to the rise of gold in this period of time.

This is followed by a fall in the price of the period from February 21 to March 4, during which:

On February 21st, the Federal Reserve announced in the minutes of the January monetary policy meeting that almost all members hoped to end the contraction later this year and that the downside risks to the economy have increased.

On February 25, after the top leaders of China and the United States indicated that they might reach a trade agreement, Trump said that it would postpone the scheduled tariff on China’s exports to the United States on March 1st. The negotiations achieved "significant progress" and the risk aversion sentiment fell further.

Between April 2 and June 20, gold and bitcoin went out of a very similar period of sharp rise. From the picture, Bitcoin's several jumps are more obvious, and gold is ushered in a significant sharp rise after May 20. During these two months, the same important events were sorted out.

On April 2, according to the Wall Street Journal, Trump slammed the Federal Reserve and its chairman Powell at three meetings in the past week, accusing it of dragging down the US economy and the stock market. Moreover, Trump once considered replacing Fed Chairman Powell, while the White House economic adviser called for the Fed to cut interest rates by 50 basis points.

On May 10th, the United States raised the tariff rate on more than 200 billion US dollars of Chinese goods. The Chinese Ministry of Commerce issued a statement saying that China deeply regrets this and will have to take necessary countermeasures.

On May 27, President Trump "reformed" and said, "I am not ready to reach a trade agreement with China."

On May 30, Trump announced that the United States would impose a 5% tariff on all goods from Mexico. A 5% tariff on all goods from Mexico will take effect on June 10.

On June 10, Trump once again criticized the policy decision of Fed Chairman Powell and publicly criticized the Fed for "making a big mistake" (risk hike).

On June 20, the Federal Reserve announced a monetary policy resolution, announcing that interest rates remain unchanged but released a strong rate cut. Gold broke out and once broke through the $1,360/oz mark, setting a new high since April 2018. Bitcoin hit a new high in the past year.

Since June 20th, gold has ushered in a series of shocks. Bitcoin pushed the price up to nearly $14,000 on June 26 after the gold broke new high, and then ushered in a continuous decline, and the price once fell below 10,000 yuan.

On July 31, under the influence of the Fed’s first interest rate cut in a decade, gold and Bitcoin ushered in a new upswing.

On August 5, due to many factors, the international risk aversion sentiment rose rapidly. After rising through the 1450 and 1460 barriers, gold reached the highest level of $1,469.60 in more than six years. Bitcoin also rose back above the 11,000 mark.

In the first half of 2019, overall, Bitcoin's increase in the first half of 2019 was about 297.4%, but the retracement rate also reached 44%. Although the increase of gold is about 16.4%, it is a thousand miles away from the increase of Bitcoin, but its maximum retreat is only 5% (calculated by a rising market).

Gold and Bitcoin have some very similar trends at some critical points. And the past development history of Bitcoin is in a long and amazing bull market. Although the fluctuation of Bitcoin is more intense than gold, its hedging property has gradually emerged.

Source: Financial Sector Forex Channel