Unusual monetary policies will bring gold to glory, says the Bank of America. Experts believe that Bitcoin can hitch a ride.
The crisis in the economy caused by the coronavirus forced the Bank of America to revise its gold price forecast upwards, raising the estimated value to $ 3,000 in the next 1 or 2 years. Experts believe there is a beneficial correlation for Bitcoin.
In recent weeks, central banks have been flooding the global economy with fiscal stimulus in an attempt to inject some momentum into the markets. In the USA, the Senate signed a $ 2 trillion fiscal stimulus package to circumvent the effects of the coronavirus.
As a consequence, safe harbor assets, such as gold, have everything. On April 14, the precious metal hit $ 1,700 an ounce with investors looking to mitigate risks. Now, with no indication that the economic turmoil is ending, the Bank of America proposed that gold could almost double in a few more months.
Bitcoin halving is right there
Meanwhile, Bitcoin is ready to undergo a shock in its offer. O halving – as its name suggests – will cut the reward for Bitcoin blocks in half. Some believe that the currency’s value will rise with such an event.
Among those who believe this is the Maximalist Tim Draper. According to him, Bitcoin’s limited offer protects him against inflation caused by government measures taken around the world.
“The flood of dollars in the market will dilute its value. People will prefer certainty. There are only 21 million Bitcoins. It is certain that it will never be diluted by political manipulations, ”Draper explained. Gold is not as good as currency as Bitcoin, according to Draper, since “it is not easy to buy a cup of coffee with gold. Therefore, Bitcoin is indeed a better currency. ”
Bitcoin and gold in harmony?
However, the Bitcoin evangelist and co-founder of Morgan Creek Capital, Anthony “Pomp” Pompliano, does not believe that there needs to be a relationship between gold and Bitcoin.
“Both Bitcoin and gold have money principles,” he said. “The macro scenario suggests that assets with such principles would do well to get out of the current liquidity crisis in which we are. If that happens, both Bitcoin and gold can benefit simultaneously. ”
So, as a hedge against inflation and governmental crises, gold admittedly has a small advantage over Bitcoin – especially when it comes to attracting the attention of traditional investors.
Even so, with the virus closing gold refineries, access to the gold market is becoming restricted. Jason Deane, an analyst at Quantum Economics, believes investors can look for an alternative.
“Bitcoin is well positioned to act as a store of value for those who do not have easy access to gold, such as small investors, who can look for alternatives as their dollars depreciate over time,” said the analyst. “This would, in my view, lead to a price increase in Bitcoin, but it will not happen soon after the halving. Like gold, it will take time for the effects of Bitcoin’s reduced supply to appear. ”
The consensus seems to exist on the fact that a rise in gold positively affects Bitcoin in one way or another. However, as argued, nothing in life is guaranteed – and this is reinforced in the case of the crypto market.