The entire crypto market is still silently hoping for a Bitcoin (BTC) bull run sometime soon. While many think the upcoming halving in May is the right ingredient, others still think there’s a chance for some increase before then. Regardless, there seems to be a general optimism about Bitcoin, which stems from the recent U.S. and Iran conflict.
Cryptoasset investor and analyst Andrew Kang has put forward a series of arguments that point to Bitcoin being as strong as gold, as an alternative investment and store of value (SoV), in times of chaos.
Taking to Twitter, Kang said that recent events have shown that Bitcoin has a high correlation to gold and other SoVs, which is “incredibly bullish for BTC.”
Reflexivity
Kang began with the economic theory of reflexivity, which was popularized by George Soros, a hedge fund manager. Kang says reflexivity describes a situation where people’s subjective beliefs of markets can have some effect on market fundamentals through strong feedback loops.
This basically means that if the perception of a market phenomenon or asset is positive, the asset eventually morphs into a positive state. Kang is suggesting here that if members of the crypto/Bitcoin community decide to see Bitcoin as a reliable store of value, the predictions will come to pass.
Is Bitcoin A Strong Enough Hedge?
As the situation between the U.S. and Iran began to deteriorate, the price of crude oil and gold, started to rise. This undoubtedly means that people saw these assets as a bunker room, where investments could remain largely untouched. Well, Bitcoin also joined these alternative SoVs and jumped in response to the chaos, just as gold and oil picked up.
After a series of attacks, U.S. President Donald Trump announced that the country was unwilling to further the conflict. When people realized that the unrest was settling, both Bitcoin and Gold began to fall.
Kang admits here that it’s possible that the rise and fall in response to the conflict was probably triggered by speculators. However, regardless of that possibility, Kang says that people have a stronger “belief in BTC as a hedge to global uncertainty, leading to more people trading BTC on macro events.”
This recent event has made Kang bullish about Bitcoin’s chance as a store of value. His concluding tweet suggests that this is just the beginning.
“This feedback loop will continue, causing BTC to continue to appreciate while capturing premiums from other SOVs and for enough data to be produced that even the strongest sceptics will not be able to deny BTC’s utility.”
The post How Bitcoin’s High Correlation To Gold and Other SOVs Is Strangely Bullish For BTC appeared first on ZyCrypto.
