Between the inflation and collapse of cryptocurrencies, bitcoin is once again in the news. If bullish investors thought BTC would be the perfect inflation hedge, the current situation for the big cryptocurrency must disappoint them. So Jim Bianco explains why bitcoin failed in its mission.
The correlation between bitcoin and stocks
Crypto assets have been under attack for a long time. While people have experienced the use of money, the creation of crypto creates a new era. In fact, more and more entrepreneurs are trying to explore this exciting sector. Who would refuse a proposal to earn money without the need for an intermediary. Banks are binding. Every penny is controlled by people who decide whether or not you are worth taking possession of your property.
Due to the complexity of the banking system, bitcoin quickly hit the market and established itself as the queen of crypto due to its market capitalization. With media coverage of these assets, BTC quickly came as a lifeline for many investors. Some governments have come to the point even when they see it as a path to financial independence. That’s why when inflation started, everyone thought bitcoin would once again be the perfect hedge. Unfortunately, he failed in his mission.
Following this failure, long-term investor Jim Bianco spoke out recently Twitter feed. In fact, it cites the reasons why bitcoin failed to reach its goals. The biggest problem, he thinks, is the narrative aspect. For the past six months, bitcoin has been selling at the same rate as stocks. So as long as cryptocurrencies trade in conjunction with the S&P 500, bitcoin will continue to fall. According to him, the crypto giant is secretly hoping to print more money. Why? Because risky assets tend to take advantage of many types of quantitative easing and low interest rates.
BTC records its worst quarter in a decade
The current phase of bitcoin discourages investors. While many of them see the end coming, only the biggest traders keep their chips. While BTC is currently trading over $ 20,000 based on data from Tradingview, the data has not been good recently. Since the onset of the market crisis, bitcoin has lost about 69% of its value from its all-time high. Its correlation with equities is of little help.
While bitcoin is recording its worst quarter in a decade, the Nasdaq meanwhile is recording its worst quarter since 2008. According to Jim Bianco, that should not be the case. But it happened, and it could continue. Its importance is questioned by the failure of the crypto flagship to be a safe haven during market turmoil. In fact, 2022 does not appear to be favorable to the asset and its failure confirms the hypothesis that bitcoin is a risky asset.
One of the leading banking institutions in the US, this scenario was predicted by the Central Bank of America. In fact, she noted that, due to its correlation with stocks, bitcoin is not a viable portfolio diversifier.
Investors put a lot of hope in the potential of bitcoin. However, things do not go as planned and the predictions go away. As they all saw BTC as a perfect hedge against inflation, Bank of America’s predictions come true. According to investment expert and analyst Jim Bianco, this failure is due to a telling problem.
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The world is changing and adaptation is the best weapon to survive in this turbulent universe. As a crypto community manager at the base, I am interested in everything directly or indirectly related to the blockchain and its derivatives. To share my experience and share an interesting field for me, there is nothing better than writing informative and reassuring articles at the same time.