Bitcoin Becomes More Attractive as Recession Indicator Flashes New Warning Signal
- Gresham law is driving crypto to replace fiat, says Clem Chambers, CEO of ADVFN
- Bitcoin and Gold become more attractive while low yields of Govt. bonds make them less appealing
- Bitcoin is doing exactly what it's designed for and emerging as the winner of the market
Gresham law is driving crypto to replace fiat, is how Clem Chambers, the CEO of private investors website ADVFN defines the current Bitcoin and fiat situation.
The ongoing US-China trade war, Chambers explains, means yuan is bad money and BTC the good one. This is why Bitcoin is rocketing up as there are big buyers of Bitcoin in Asia. These buyers he says either want out of yuan and into dollars or looking for something that is not correlated to the falling yuan.
“A bitcoin is a dollar surrogate and one you can buy then ship anywhere in moments. What is more, being “good money” it is going to appreciate in dollars as an extra benefit as demand for bitcoin escalates,” said Chambers.
Bitcoin is doing exactly what it's designed for
In the last few weeks, a lot has happened that is directly affecting the Bitcoin and crypto industry. In July, we saw the Fed Chairman calling Bitcoin store of value like gold and US President and Treasury Secretary talking about cryptocurrencies. Soon after, the regulator and authorities came to the realization that they can’t ban Bitcoin.
The last week of July, the Fed made its first interest rate cut since 2008 that had stocks and bitcoin soaring.
Now, a threat of currency war is looming while trade tension escalates. President Donald Trump abruptly cut off the trade war cease-fire by announcing the 10% tariff on another $300 billion Chinese goods.
In response, China's central bank let its currency yuan go above the important psychological level of 7 against the US dollar in over a decade. This prompted, the US labeling China a currency manipulator, in a historic move that was last made in 1994.
This has the stock market seeing its worst day of the year on Monday while gold and bitcoin climbed higher. This Jake Chervinsky says is exactly what Bitcoin has been designed for.
Bitcoin is doing exactly what it's designed for today:
– Fed cuts interest rates, making money cheaper
– China devalues yuan, escalating currency war
– Dow falls 760 points, losing January 2018 highs
– Bitcoin rises 7.5%
If you're surprised, you haven't been paying attention.
— Jake Chervinsky (@jchervinsky) August 5, 2019
Bitcoin and Gold become more attractive while low yields of Govt. bonds make them less appealing
Gold prices have now paused after scoring another six-year high as safe-haven demand rose amidst an escalating US-China trade war. In past 7-days, gold price rose 3.3 percent.
Bitcoin meanwhile went as high as $12,325 from $9,150 on July 28th. BTC/USD has surged more than 21% in the past 7 days. Government bonds are another safe-haven asset, aside from gold and Bitcoin but these bonds are driving the demand for other safe assets higher.
Govt. bond yields are testing multi-year lows around the world, spurred by investors’ worries about intensifying trade tensions and its impact on the economy.
An important market-based recession indicator that helps set borrowing costs on everything from corporate loans to mortgages, govt. bond yields flashed new warning signals Monday. Declining for the fourth consecutive session, it fell to 1.738%— the lowest close since October 2016.
#Gold and #Bitcoin keep surging in tandem amid Risk Off mood and as yields fall around the world. Because neither gold nor Bitcoin pay interest, they become more attractive as low yields make bonds less appealing, BBG‘s Goodman says. pic.twitter.com/QNDjAt9vIm
— Holger Zschaepitz (@Schuldensuehner) August 5, 2019
This is why Nick Szabo, a computer scientist and cryptographer known for his research in digital currency says,
“Gold and Bitcoin also hedge against inflation, never pay negative interest, and when held directly are not subject to haircuts and do not depend on strangers keeping their promises.”
Bitcoin’s price is $48,336.30 BTC/USD exchange rate today. The real-time BTC market cap of $901.21 Billion currently ranks #1 with a chart dominance at 62.37%, daily trading volume of $18.95 Billion and live coin value change of BTC -5.13 in the last 24 hours.