Bitcoin's perception has now become reality

“Perception is more important than reality. If someone perceives something to be true, it is more important than if it is in fact true.”

- Ivanka Trump


What an insane week around the globe. Equities investors are having a heart attack, fake meat is still outrageously priced, and China's currency is falling off a cliff.

But perhaps more important is the perfect storm that is currently brewing for cryptocurrency markets.

BTC is undoubtedly gaining public perception as a ‘safe-haven’.

Over the last week, financial markets have been hit with a myriad of bad news including a slashing of the official cash-rate by the Fed, and more recently, an escalation of the US-China ‘trade wars’ that have now put an enormous amount of pressure on currencies and commodities globally.

Bad news is a cyclical and recurring theme of financial markets, however, this time we are noticing something different. For the first time, several financial analysts and market commentators are referring to Bitcoin as a safe-haven next to the likes of Gold, Fixed Income and the Yen. (video here)

This might seem trivial to some, but the fact that traditional market participants are aware of the that BTC appreciation is correlated with Gold as a ‘safe-haven’ is a huge deal.

Binance Research beat us to the punch and put out the below chart highlighting the appreciation of BTC in line with JPY, CHF and USD. More speculative asset classes and instruments that are heavily affected by economic uncertainty such as DJI, CNY and OIL are struggling to find their feet.

Crypto ‘haters’ will take the other side of this argument, claiming that the data (or absence of data) for new institutional and retail inflows does not yet support the story for BTC’s recent appreciation.

They may actually be right, but in our view, it doesn’t matter.

To take a quote from Ivanka Trump (which we feel is quite fitting given the current circumstances):

“Perception is more important than reality. If someone perceives something to be true, it is more important than if it is in fact true.”

The ‘digital gold’ narrative is in play

Bitcoin has long been called the ‘new-age’ gold. Traditional gold bugs hate this reference, but the data doesn’t lie.

In fact, the data might just bring a tear to their eye.

BTC is outpacing physical gold by as much as +23.9% in the last 7 days alone and up +42.8% over the course of a year. The spread between XAU and BTC is increasing rapidly by the day.

Which safe-haven would you pick?

(Chart courtesy of our friends at Coin Gecko)

The new hedge to equity market volatility?

Another interesting correlation we are observing is the relationship between Bitcoin and the VIX. The VIX is the volatility index which derives its price from the ‘implied volatility’ of the S&P500.

Put simply, when there is major volatility and drawdowns in the US equities market, the VIX can skyrocket as option premiums become more expensive.

(BTCUSD/VIX - tradingview)

Based on this relationship, the data suggests that when the equities markets are in a state of flux, the VIX would rally at the same time as BTC (or vice versa).

We will be keeping an eye on this correlation, but it is fair to say that we are currently seeing more and more evidence daily that Bitcoin is becoming a newfound hedge to global market volatility and the ultimate safe-haven against an impending economic downturn.

Before we wrap it up, a soft nudge to let you know that we have some big news being released tomorrow. Keep an eye out.

Stay safe out there,

Matthew Dibb | CIO

P.s Follow us on twitter and if you like this article, please share it.


About Astronaut Capital

Since 2017, Astronaut Capital has been one of the leading asset-managers for cryptocurrencies and digital assets. Utilizing its internal research team at Picolo Research and STO Rating, Astronaut operates long/short strategies to navigate the market on behalf of investors.

For subscription information about our investment funds, visit www.astronaut.capital or follow us on twitter.


Not signed up to Dark Pools?

We do our best to deliver you one mind-bending article a week from the desk at Astronaut Capital.

It’s free.

Click below to get added to the list.