Analysts have reported that the emergence of Bitcoin, in addition to Bitcoin Futures trading, could be responsible for a new decline in the value of gold.
Bitcoin has been heralded as a new form of digital gold, and that saying has taken on new meaning today as analysts have posited that the cryptocurrency’s meteoric gains (and the emergence of futures trading) could be responsible for gold hitting a new low point.
Analysts have announced their view that some investors could be favouring bitcoin as a store of value – leaving gold to lag behind in market value. Most prominently, GDX (an exchange-traded fund for gold miners) has lost 15% of its value while gold prices have resumed low values last seen in July this year.
Speaking to CNBC, Larry McDonald, head of U.S. macro strategy at ACG Analytics, offered that the price of gold is usually strongly correlated with bond yields – however, that link has dissolved in recent weeks.
McDonald offered his view that that bitcoin’s major rally is responsible, and the continued growth of other cryptocurrencies is to blame – quipping that “If you add up all the cryptocurrencies and the liquid gold that’s in the market right now, the cryptocurrencies in market cap are now 23 percent of the liquid tradeable gold… That’s up from 2 or 3 percent a year ago, so cryptocurrencies are definitely eating into the gold play.”
Similarly, Phillip Streible, a senior market strategist at RJO Futures, provided his view that the success of bitcoin futures contracts would become a ‘key indicator’ for gold’s future. Streible offered that should bitcoin futures collapse, gold will once again take the lead as a ‘safe haven’.
The metaphorical trial will continue on December 18th this month, where the Chicago Mercantile Exchange (CME Group) plans to launch its own bitcoin futures contracts to the public.
Other developments – including news that Bank of America has been awarded a new patent for a cryptocurrency exchange system – could well open doors to further customers around the world.
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