A financial journalist and Bloomberg columnist has called gold and Bitcoin “monuments to irrationality”, citing the rush to both physical and digital gold on the back of growing global economic instability as being “backed by faith” rather than fact. Citing his notion that Bitcoin is “driven by emotional factors like greed and fear” and that the value of both assets is down to “human psychology and herd-like investment behavior”, Lionel Laurent claims that the performance of both assets in 2019 shouldn’t be indicative of them being considered “sound money” at a time when equities, bonds, stocks, and commodities are stagnating, or worse.
So negative yields are irrational, but we’re going to let “sound-money” folks promoting gold and Bitcoin off the hook? https://t.co/5o1SDZdDvB
— Lionel Laurent (@LionelRALaurent) August 9, 2019
Bitcoin up as Currencies Waver
Bitcoin’s resurgence this year has been a surprise to those who, yet again, declared it dead after the collapse in 2018. The sudden growth this year has only been a surprise to supporters in the sense that it happened so quickly after the bear market, a growth that has been put down to a number of reasons, from institutions buying up before the ‘herd’ arrives to Chinese citizens trying to find a safe-haven for their capital in the wake of the trade war with the U.S. Either way it has put the cryptocurrency back in the limelight at a time when fractious geopolitics has caused investors worldwide to flee poorly performing assets and look for the more traditional safe havens of gold and silver, with Bitcoin now seemingly added to the mix.
Bitcoin’s Time to Shine?
Laurent believes that Bitcoin in particular should not be seen as a safe haven, which is exactly what the Chinese state media called it earlier in July, because of its “wild west status and mad gyrations in value over the past few years”. Not even the most ardent Bitcoin maximalist can deny that its fluctuations have made it less than ideal as a safe haven asset – indeed this is what has made it such an attractive option to many over the years. However, past performance is no guarantee of future results, and there is no reason to think that Bitcoin won’t at some point level out as it finds its true use case and therefore value. No one knows where this level will be, or indeed what its end use case, but it is folly to think that just because something has followed a particular path for ten years that it will continue to do so. Maybe after a decade this is finally Bitcoin’s time to shine, especially as the value of much vaunted fiat currencies hangs in the balance.
A Currency Crisis?
When the long-term charts all start pointing to a single event risk, I pay attention.
When those charts are at the KEY level, I focus.
And when they break, it is time for action…
Something really BIG is going on…
— Raoul Pal (@RaoulGMI) August 7, 2019