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Bitcoin may sustain $10K as gold nears ‘inflection point’ vs. stocks

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Huge gains in stock markets despite the dire economic consequences of coronavirus may soon be a thing of the past, one analyst warns.

In a tweet on Sep. 4, Mike McGlone, senior commodity strategist at Bloomberg Intelligence, said that gold may soon get the limelight as markets reach an “inflection point.”

Strategist: fiat markets may soon face day of reckoning

“In a battle of the bulls, we see greater potential endurance favoring #gold over the #Nasdaq,” he wrote. 

“The conundrum of monetary and fiscal stimulus lifting most assets may be nearing an inflection point, where the increasing certainty of QE and budget deficits firm gold’s foundation more.”

McGlone was referring to the major market phenomenon of the past six months — equities keep going up, even reaching new highs, while central bank interventions in the economy reach unprecedented levels. 

Previously, analysts even postulated that stock markets’ value no longer matters due to the extent of manipulation since March.

Gold and Bitcoin (BTC) have both profited from fiat uncertainty since July.

Nasdaq vs. gold, central bank balance sheet chart. Source: Bloomberg/ Twitter

Bitcoin and gold contrast fresh dollar pressure

Another curious counterpoint comes in the form of the U.S. dollar currency index (DXY), which recently plumbed two-year lows. For gold bug Peter Schiff, the outlook for the precious metal is likewise favorable thanks to geopolitical shifts as a result of this USD weakness.

Discussing news that China plans to reduce its dollar exposure, Schiff said that, as before, average Americans would end up footing the bill.

“If true this is very significant,” he tweeted. 

“In fact, my feeling is that China will reduce its exposure by much more. It’s also likely that other nations will do likewise. That means the Fed is gonna need a much bigger printing press and Americans had better be prepared to really pay up!”

Schiff added that during this week’s retracement, gold won out over Bitcoin, which saw sharper losses. New strength in DXY, however, may yet spell trouble for optimism over both assets.

Bitcoin vs. gold realized correlation 6-month chart

Bitcoin vs. gold realized correlation 6-month chart. Source: Skew

Earlier, Cointelegraph reported on eerie similarities between the current environment and that of 1929, the year of an infamous crash which celebrates its 91st anniversary Friday.





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El Salvador to airdrop $30 in Bitcoin to every adult citizen

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The president of El Salvador  has announced the government will airdrop $30 worth of Bitcon (BTC) to every adult citizen of the country.

The announcement was welcomed by Bitcoiners, with influencers speculating El Salvador’s government wil need to purchase the required BTC it intends to distribute adding more than $100 million in buying pressure on markets.

Quickly googled estimates of the adult population of El Salvador varied, with onchain analyst Willy Woo tweeting that Bitcoin’s global user base will grow by 2.5% thanks to the influx of 4.5 million Salvadorians.

Others placed the Salvadoran adult population as high as 6.5 million (which is actually the total population), with Yahoo Finance anchor Zack Guzman using the figure for some rough back of the envelope calculations suggesting that $195 million worth of Bitcoin will be airdropped across the country.

Exact figures are hard to find but Statista shows that in 2019 the population aged 15 and above was 4.72M.

However, crypto Twitter’s euphoria may be be slightly premature, as local publication Prensa Latina notes El Salvador’s citizens will only receive the free Bitcoin after downloading the government-issued cryptocurrency wallet application.

The news was announced during a June 25 press conference, with President Bukele stating the government’s “wallet app will even work anywhere with a cell connection, and you won’t have to have a cell plan for the app.”

President Bukele also stated that the country’s much-celebrated Bitcoin law recognizing BTC as legal currency nationwide will come into effect on September 7.

Related: Opposition poses constitutional challenge to El Salvador’s Bitcoin law

El Salvador’s Bitcoin law was passed roughly two weeks ago. While the move has been praised by the global crypto community, the legislation has faced opposition from a minority political party and the World Bank.