Bitcoin has regained prominence after a tough start to the year, but it remains to be seen whether its price surge is sustainable or if it was an overhyped “buy the dip” moment after the financial markets sold off due to a variety of systemic shocks.
We’ve recently seen an increasing correlation between Bitcoin and the Nasdaq, suggesting that Bitcoin as a previous inflation hedge may now be considered a “tech stock esque” investment for market participants.
It’s also clear that a negative correlation between Gold and Bitcoin has developed recently.
We see inflation as a temporary threat because real GDP in the U.S.
A growing real GDP doesn’t necessarily lead to further growth in broad-based inflation, as much of the recent inflation has been down to push inflation.
If Bitcoin sustains its correlation to the Nasdaq, we could see it surge in conjunction with technology stocks, considering the TFP has found prominence again after flatlining for a while .
To finish this segment, Bitcoin’s trading above its 10-, 50-, and 100-day moving averages suggests that a momentum pattern has formed.
Finally, although we believe that Bitcoin has gotten too large to regulate with hard lines, it’s evident that much of the cryptocurrency space is still being increasingly regulated.
Simultaneously the asset has disconnected itself as an inflation hedge while gold has regained its status as the ultimate inflation safety net.
Disclosure: I/we have a beneficial long position in the shares of BTC-USD either through stock ownership, options, or other derivatives.