Bloomberg Bitcoin Is Stabilizing at 6x the Price of Gold

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In its crypto outlook for August, Bloomberg contends that the price of Bitcoin ( BTC ) is stabilizing at six times the price of an ounce of gold. This speculation came shortly after the correlation between the two assets reached an all-time high. Bitcoin and Gold price chart. Source: Trading Economics . Bloomberg has professed for some time now that Bitcoin is on the verge of becoming digital gold . This is due to the asset’s inherently similar qualities, such as a limited supply and a low growth rate. The company is now taking its hypothesis a step further by claiming that there is a price ratio relationship between the assets:“Stabilizing at about 6x the per-ounce price of gold, Bitcoin's increasing correlation and declining volatility relative to the precious metal indicate an enduring relationship for price advancement, in our view. Unparalleled global central-bank easing should remain a tailwind for the quasi-currencies.”It is unclear why there would be a mathematical relationship between the prices of these two assets at present. However, if this relationship persists into the future, the price of Bitcoin may appreciate to $18,000. To this effect, Bloomberg sees “the potential upside in spot gold toward $3,000 an ounce”. Bloomberg also believes there is an on-chain indicator which backs up the idea that Bitcoin is currently undervalued:“The 30-day average of addresses from Coinmetrics on Aug. 4 translated to a Bitcoin price above $14,000, vs. about $11,000 on an auto-scale basis since 2017.”The report points to the continued expansion of Grayscale’s Bitcoin Trust Fund , or GBTC, as a significant factor in diminishing Bitcoin’s available supply “GBTC inflows over the past year have absorbed about a third of new Bitcoin supply. If the inflow pace doesn't subside, absorption will approach 50%, with less supply.”Bloomberg says that something unexpected would need to happen to prevent Bitcoin’s advance in the face of prevailing “zero and negative interest rates” .


All data is taken from the source: https://cointelegraph.com/
Article Link: https://cointelegraph.com/news/bloomberg-bitcoin-is-stabilizing-at-6x-the-price-of-gold


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