Bitcoin, which is also step by step: an alternative feast brought by the skyrocketing gold

Bitcoin, which is also step by step: an alternative feast brought by the skyrocketing gold

Since March of this year, the number of people playing bitcoin has increased, and most of them want to make quick money. Mr. Song, who works in the private equity industry, told the China Securities Journal.

Just as "Chinese aunt" rushed to the gold market to snap up gold, Bitcoin once again attracted investors' attention with a high-profile rise. After a lapse of 15 months, Bitcoin returned to above $10,000, and CME's main contract for bitcoin futures once broke through $11,400.

According to industry insiders, the trend of bitcoin, which is known as “digital gold”, is highly correlated with gold. As the price of gold continues to rise, bitcoin prices will continue to hit new highs, and both will follow suit. It is expected that prices will rise further before the Fed’s policy of cutting interest rates has fallen.

Gold bitcoin is strong

The price of gold, which has been quiet for many years, has risen recently and has become the most shining variety in the traditional financial market. The data shows that since June, the main contract of COMEX gold futures has risen. As of 18:00 on June 25th, Beijing time, the contract reached a maximum of 1442.9 US dollars / ounce, a new high in more than six years, and has risen 9.28% since this month, this increase almost outperformed the world's major assets.

As the price of gold continues to rise, Bitcoin has gradually become a “circle powder” variety in the financial market. From time to time, friends circle share the joy of the market. The data shows that as of 18:00 on June 25th, Beijing time, the CME Group's bitcoin futures main 1906 contract once broke through 11,000 US dollars to 11,435 US dollars, setting a new high this year.

According to the data of the Firecoin Global Station, as of 18:00 on June 25, the price of Bitcoin was reported at $11,361, and the cumulative increase since the month was over 35%. However, prior to this, the bitcoin market had experienced a year-long bear market, and prices once fell from a December 2017 high of $1,875 to $3,155 in December 2018. At the beginning of this year, the price trend of Bitcoin was also quite depressed, but it began to pick up in late March and stood at $4,000. Subsequently, the price climbed steadily, breaking through the five integer points of 5000-11000 US dollars along the way. The cumulative increase has exceeded 200% this year.

"Bitcoin, like gold, is a dollar-denominated investment target. In this context, both are affected by the US dollar exchange rate and Fed policy expectations." Financial analyst Xiao Lei said that the Fed has gradually released loose expectations recently. As risk aversion heats up, investors' concerns about future inflation expectations have led to increased market chasing for assets such as bitcoin and gold. In addition, gold and bitcoin are the subject of decentralized investment and do not require any government credit endorsement. Therefore, the geopolitical situation such as the situation in Iran has intensified and some investors have begun to intervene in borderless assets, especially the bitcoin which is still relatively anonymous.

Cheng Xiaoyong, director of the Baocheng Futures Finance Research Institute, believes that the combination of the market's enthusiasm for global economic growth since March began to turn pessimistic, and the time point of global monetary easing expectations, the only factor driving the return of Bitcoin back above $10,000 is Speculative attributes. A series of blockchain payment messages, such as the Libra project initiated by Facebook, just added a boost to the rise in bitcoin.

There is no obvious contrast between the two?

In fact, since the Bitcoin transaction, discussions about its relevance to gold have continued.

There is a view that since many investors use Bitcoin as a new safe-haven asset in the 21st century, the trend of Bitcoin, which is known as “digital gold”, is highly correlated with gold. For example, as the price of gold continues to rise and hit a multi-year high, Bitcoin prices are also constantly hitting a stage high, suggesting that there is some connection between the two.

"In terms of attributes, gold and bitcoin have certain scarcity. In fact, the creative source of Bitcoin is the gold in reality." Xiao Lei said that in the early 1990s, some people used computer programs. A system of digital gold has been developed, but because of the very common and in-depth consensus on gold, it is difficult to accept for a while. Bitcoin is using more advanced blockchain technology to make more people believe that they are digital gold. At present, before this technology has no major risks, it has indeed realized a payment method that transcends the existing monetary and financial systems. This approach is similar to the digitization of gold. Therefore, the two are scarce and decentralized. In terms of globalization and global consensus, there is a certain commonality, but the stability of Bitcoin still needs a longer game.

Cheng Xiaoyong believes that in the process of rising gold and bitcoin in 2019, the driving factors are the Fed’s renewed easing expectations and the monetary policy shift including the resumption of quantitative easing in Europe. However, because Bitcoin does not have monetary attributes and does not have a safe-haven property, if the market is panicked by the currency tightening, Bitcoin will not escape the fate of the plunge. At present, Bitcoin can only be defined as a digital virtual currency based on blockchain technology, a speculative object that can bet on the future of blockchain technology. While gold has been a natural currency in history, its connection with the currency has been weakened, but it has not been completely cut off. In the current case of the depreciation of the US dollar, it has become a golden guarantee for the credit guarantee of the US dollar (now a government credit). The price rise will occur, and the bitcoin rise is only due to the speculative property spillover of the other assets at the high level of monetary easing. There is currently no evidence to prove that there is a strong special relationship between the two.

Going further and further or returning to silence

Compared with the “peak time” of nearly 20,000 US dollars in December 2017, is there any room for the bitcoin price to rise?

Xiao Lei believes that the investors attracted by the bitcoin price increase are more traditional market investors. Therefore, the performance of the market, real estate, foreign exchange and other markets will have a great impact on the sustainability of bitcoin price increases. . If investors find that other markets have more investment opportunities due to monetary easing, the funds currently gathered in the bitcoin market may collapse. However, as the size of the Bitcoin market is still small, short-term price movements will exceed the imagination of many investors, so the upside is still difficult to predict. However, before the Fed’s policy of cutting interest rates has fallen, it may rise further. As for other digital currencies, the probability of following them is higher, but more professional investors have been involved in this market. Pulling up shipments and price manipulation will make the next round of adjustments even more fierce.

Zhao Xiaojun, a prospective precious metals analyst at Zhongda Futures, also believes that following Facebook’s release of the Libra white paper, Japanese social giant line also broke the news that it will receive a license-issued online exchange exchange issued by the Japan Financial Services Regulatory Authority (FSA). As social giants enter the encryption market one after another, it will bring huge traffic to Bitcoin, which will greatly promote the development of Bitcoin. Other digital currencies will inevitably follow higher, but because other digital currencies lack effective supervision, the risk will be greater than that of bitcoin. In terms of liquidity and security, investors should prefer mainstream digital currencies.

Cheng Xiaoyong believes that the risk of rising bitcoin this round is higher than the previous round. The knowledge structure of the bitcoin market and its own technology are difficult to master, and there is no risk attribution problem. For example, the risk of investing in the US dollar may be related to the US economy and debt. The risk of investing in gold may be related to the Fed's monetary policy and inflation level. However, because Bitcoin is not identifiable, the only obvious thing is speculative buying under monetary easing. And this kind of buying is still not stable. In addition, the current digital virtual currency such as Bitcoin can not achieve real money function scenarios, such as lack of supervision, lack of credit guarantees and failure to significantly help the real economy, and some are just speculative. The trend of other digital currencies is a trading principle with the bitcoin market, so after a wave of market, it will only return to silence.

Source: China Securities Journal