Bitcoin Magazine: The Bitcoin-Gold-China Connection

Over the past few years, investors have looked for places to hedge against the impact of inflation. Historically, that’s come from gold. However, more recently, Bitcoin has attracted investor capital for the same reason.

Both are similar right now. The global gold supply increases about 1.7 percent annually from mining. The Bitcoin supply increases by about 1.8 percent right now. But Bitcoin will undergo its next halving in April 2024, which will lower its future supply increase.

During the recent market volatility, Bitcoin held relatively steady, and even trended slightly higher. Gold, however, sold off.

This decoupling indicates that some investors were selling off gold on concerns that a declining market would also mean lower gold prices.

Another suggestion is that China is selling some of its gold holdings. By selling gold instead of dollars, China can raise capital and protect their currency from fluctuating too much in global markets.

China may be facing a dollar shortage. Selling gold instead of Yuan or U.S. Treasury holdings may provide financing at a critical time.

With bond yields peaking last week and starting to come down, “risk” assets such as stocks are likely to move higher. So is crypto. And investors may want to add to their Bitcoin holdings ahead of the next halving.

With fear in the market coming down, gold prices may now start to lag further in the months ahead.

To read the full analysis, click here.