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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
FOREX
- In the past year, we have seen that Bitcoin has been much more sensitive to the dynamics of inflation expectations than gold, which has constantly been testing lower highs since its peak reached in August 2020.
- Investors seem to have lost appetite for the precious and have looked at Bitcoin as a new ‘digital gold’ that could be the alternative investment to hold in the medium term if inflationary pressures remain elevated longer than expected.
- Even though Bitcoin could be seen as a ‘contemporary hedge’ against capital control, currency depreciation and inflation, it is still a ‘risk-on’ asset that tends to perform poorly when price volatility rises.
- On the other hand, gold is a ‘zero-beta’ asset that tends to be resistant in periods of market stress.
- The chart shows that Bitcoin returns plummet in high-volatility regimes; in the past 10 years, returns have averaged -4% when the VIX was trading above 30.
- In the last two selloffs, Bitcoin dropped by 42% in Q4 2018 and by 9% in Q1 2020, while gold prices rose by 7.6% and 3.6.%, respectively.
- The chart shows the performance of gold and bitcoin for different levels of volatility (VIX) in the past 10 years.
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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