Can Bitcoin already be called a protective asset or does it still take time

    Корреляция биткоина и фондового рынка 
    Correlation of Bitcoin and the stock market

    Billionaire Mark Cuban is confident that bitcoin can show itself during the crisis of 2020 [ 19459010], that is, it will become a protective asset along with gold. We are sure that the real potential of BTC is even greater, but first you need to figure out whether Bitcoin is actually a protective asset.

    To do this, we propose to analyze the correlation between the S&P 500 index and Bitcoin, as well as deal with the behavior of gold during previous crises.


    Protective asset

    Биткоин как защитный актив
    Bitcoin as a protective asset

    In fact, bitcoin is not a protective asset and we have for this statement There are two reasons.

    The first - Satoshi Nakamoto did not create a protective asset. Here is the time to be indignant and say that bitcoin was made to protect against banks, and it also appeared just after the 2008 crisis.

    That's right, but the protection from banks is that during a crisis they take money from people by restricting cash withdrawals, freezing accounts and directing your funds to support the state.

    The Bitcoin security mechanism is that there is no third party between the sender and receiver of the transaction that can block or cancel the transfer.

    Also, no one can dispose of your funds, because only you know the private key needed for this .

    And the fact that we are accustomed to considering bitcoin as a protective asset can be thanked for this by Mike Novogratz, Anthony Pompliano, Max Kaiser and other Bitcoin supporters. To everyone who talked about the advantage of bitcoin over fiat currencies due to the limited and transparent issue.

    However, a somewhat erroneous opinion was formed. We have so often said that bitcoin - is the only line of defense against the Central Bank's printing press that they began to call it a protective asset.

    At the moment, this is completely wrong and there is a second reason why the asset is considered protective not because someone said so, but because it behaves accordingly during a critical market situation.


    Золото как защитный актив
    Gold as a protective asset

    During the 2000 crisis, gold showed the following dynamics. First, the price goes down, because the stock market is growing much faster, and it is more profitable to invest in stocks:

    Цена золота
    Gold price

    [19459007 ]

    Then, when the first harbingers of the crisis appear, cautious investors begin to convert their capital to yellow metal and its price rises. Further, the stock market is falling, the crisis has taken place and gold is falling along with stocks, because everyone needs money for a living.

    After this, gold goes into the growth phase and its price rises faster than stocks, because investors have free money printed in the crisis, but investing them in the stock market is still too dangerous. So everyone chooses gold.

    The picture during the 2008 crisis with ups and downs is similar and more obvious:

    Цена золота во время кризиса 2008 года
    Gold price during the 2008 crisis

    [ 19459007]

    Once again, we draw your attention to the fact that gold begins to rise before the crisis and falls with stocks during its active phase, when everything seems to be lost and nothing is already will not be as before.

    Further, gold turns to an uptrend faster than the stock market and rushes to its maximum price.

    And following the logic of the behavior of the price of gold during the previous two crises, we can note on its chart a phase of decline before the crisis:

    Цена золота 
    Gold price [ 19459006]

    Further growth, when the first pre-crisis calls appear and the most cautious investors begin to exit the stock. And specifically, now we should be in a fall stage along with the stock market. The only question is what this crisis will be like.

    Personally, in our understanding, the problems accumulated during quarantine cannot be quickly resolved, and we still have to go to the bottom. But there is an alternative point of view that it was the fastest crisis in history, and the stock market has already managed to unfold.


    Фондовый рынок и биткоин
    The stock market and bitcoin

    We cannot analyze the price of bitcoin during the crises of 2000 and 2008 years, he was still not there then, but it’s in our power to figure out what has been going on from 2017 to the present day.

    In December 2017, bitcoin set its historical maximum price at $ 20,000, after which the market turned and went down. Obviously, this explosive growth at the end of the year was dictated by massive hype. People saw a highly profitable asset and carried money into it in the hope of making money. Net speculation, which ended in a strong fall over the next year.

    Interestingly, during 2017, the stock market also arranged its native and in early 2018 even drew a similar pullback:

    Фондовый рынок в 2017-2018 гг.
    The stock market in 2017 -2018

    Then the stock and cryptocurrency markets each went their own way, because the S&P 500 returned to growth, and bitcoin went to look for the bottom. But if you study the charts in more detail, you will notice that a strong drop in bitcoin often coincides with a decline in the stock market. As it was in the fall of 2018, in the summer of 2019 and in the spring of 2020:

    Движение цены биткоина в 2018-2020 гг.
    Bitcoin price movement in 2018-2020.

    But during the growth, the correlation is not so strong and while the bitcoin will move sideways or even fall, the stock market may well update its maximum price.

    This suggests that, in the understanding of market participants, bitcoin is a reserve risky asset.

    This definition refers specifically to speculators who actively trade, and when stocks rise in price - they simultaneously try to make money on bitcoin due to a higher ] volatility . And if the market becomes dangerous, they immediately begin to sell, including cryptocurrencies .

    Thus, we can conclude that Bitcoin is not currently a protective asset. But this does not mean that he cannot become one in the future, and much will depend on how the current crisis will go.

    So, recently, billionaire billionaire and critic Mark Bitan said that if people lose confidence in the fiat system due to the mass emission of new money, then bitcoin has excellent chances to act as a protective asset.

    These are the words of the same Mark Kuban, who previously said that he would be better at trading bananas than bitcoin. After all, in extreme cases, he can eat them. But even it is obvious to him that if the printing press gets out of control and leads to mass inflation.

    Bitcoin and stock market correlation

    And we will add that the banking system may stumble and people will again remember how it is when there is money in the account, but it is impossible to take it away, they will buy bitcoin . Because it is much easier to store, transfer and pay with bitcoin than gold. Do you even know where you can pay in gold? But there are more and more points where they accept payment in bitcoins every day.

    And the end, let us say again, that today Bitcoin cannot be called a protective asset. But the more mistakes states make during the current crisis, the more chances the first cryptocurrency to truly become digital gold after its completion.

    Read also:

    Will there be a bitcoin pump up to $ 9,800?

    How the outflow of investors from the crypto community will affect the price of bitcoin

    Halving on May 12: what awaits Bitcoin in a month [19459902] [19459902] ]

    See also  How to make money in 2020

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