Bitcoin and Gold Take a Beating while Stock Market Books a Winning Streak
- The US might Avoid Recession but Returns to Dwindle
- Both BTC and gold in red but Bitcoin is going to Beat Gold
- Despite being Down, Bitcoin Ruling over Stock Market
- The US stock market is enjoying a spectacular 2019.
The Dow Jones Industrial Average notched its 12th record close of 2019, the S&P 500 marked its 23rd and Nasdaq Composite recorded its 17th all-time high in 2019. All three of the benchmarks booked gains on Monday.
Optimism is in the air after White House economic adviser Larry Kudlow said the US-China is reaching a potential early stage on the trade deal. However, doubts have emerged about substantive progress ahead of a Dec. 15 deadline for the increase of tariffs.
The US economy is also facing headwinds from slower growth, muted inflation pressures, and uncertainty on the trade front. But the three rate cuts since July, New York Fed President John Williams said should help sustain growth.
The US might Avoid Recession but Returns to Dwindle
The ongoing market gains have Morgan Stanley’s Michael Wilson shifting his bearish stance.
“Our economists think the U.S. will avoid a recession next year, thanks to swift action by the Fed and improving trade tensions,” Wilson wrote.
The Morgan Stanley analyst might see the US avoiding a recession, but corporate quarterly results could produce consecutive earnings decline.
Even if a recession occurs, Oxford Economics sees it be more like a 2001-like mild one and not the bloodbath of 2008. But they also believe the financial markets are overvalued that puts the expected return for US stocks next year to be just 1%.
Both Gold & Bitcoin in the Red
Gold meanwhile, has been edging lower and the best catalyst for the bullion to move higher would be “a pullback in the S&P 500.”
Bearish analyst says gold is vulnerable amidst the general upbeatness around trade. And if a trade deal happens, the gold rally will remain shallow.
“With Brexit and the trade war about to deliver potentially two big risk-on scenarios, gold selling could get ugly if we see a breach of last week’s low,” said Edward Moya, senior market analyst at Oanda.
Meanwhile, digital gold is also in red. Today, Bitcoin dropped below $8,000 after surging to $10,500 in a 42% rally in late October.
More Gold than S&P at the moment
BTC and Gold both in the red this month as equity markets rally to record highs pic.twitter.com/aNPjbnLF11
— skew (@skewdotcom) November 19, 2019
But Bitcoin is going to Beat Gold
However, according to Clem Chambers of Investorshub.com, gold losses out to Bitcoin because you can’t carry it and it's hard to buy and store.
“If you’ve got to move fast, uncertainty means bitcoin,” said Chambers, adding the better supply-demand fundamentals and superior versatility of the leading cryptocurrency will see it “easily” going to $20,000, with expectation for $50,000.
Bobby Lee, the founder of the first Chinese Bitcoin exchange, sees Bitcoin flipping gold within 9 years pushing BTC to $500,000.
“By 20th year, daily new output will just be ~255 BTC — yearly inflation of less than 0.5%. More scarce than gold!” Lee added.
As of today, there's only six months until the bitcoin halvening!
In exactly half a year the block reward will be cut in half.
Only 900 bitcoin will be added to the circulating supply every day, which will make bitcoin's supply increase less than that of gold's ~2%.
— Rhythm (@Rhythmtrader) November 14, 2019
Despite being Down, Bitcoin Ruling over Stock Market
When it comes to the stock market, it might be enjoying more than 20% gains but Bitcoin still wins with more than 100% gains.
NASDAQ UP 27% THIS YEAR ALONE!
— Donald J. Trump (@realDonaldTrump) November 19, 2019
Since October, we saw non-existent volume on CME, the lowest since Jan 2018, but it has started gaining speed just like with Bakkt which has been making new records. Moreover, Grayscale, a “dominant force” in the market registered another record quarterly inflows.
We have also been witnessing an uptick in Bitcoin transactions and network hash rate. This rising hash rate means more miners are investing in the Bitcoin network anticipating Bitcoin value to rise in the future.