Societe Generale analysts are watching the bitcoin sell-off very closely. They say the cryptocurrency’s place in any portfolio is “highly contested,” and still recommend traders devote most of their attention to precious metals like gold. On Monday, gold edged back toward last week’s 4 1/2-month peak. Experts say the precious metal’s upward movement is very strong, adding that it is “likely to challenge a key psychological level at $1,900” in the coming days.
SocGen says bitcoin’s place in a portfolio ‘remains highly contested,’ gold is a better stabilizer
After bitcoin’s recent plunge and subsequent partial recovery, analysts at Societe Generale argued in a recent note that questions remain around the cryptocurrency’s place in investment portfolios.
“It comes as no surprise that the place of Bitcoin in any investment portfolio remains highly contested, precisely because of its erratic price movements,” Societe Generale’s Alain Bokobza and Arthur Van Slooten wrote in a Thursday note.
On Wednesday, bitcoin dived 30% to nearly $30,000 at one point, before paring some of those losses. Other cryptocurrencies were not spared as the overall value of the crypto market dropped by hundreds of billions of dollars in a single day. Bitcoin later recovered to hover around the $40,000 level on Thursday.
Bokobza and Van Slooten argued that the risks to bitcoin “remain on the downside,” citing factors such as potential regulation ahead, which the two characterized as the “biggest threat” looming for the cryptocurrency.
The U.S. Treasury Department on Thursday announced that it’s taking steps to regulate cryptocurrency markets and transactions. China has already been cracking down on the sector since 2017.
The analysts also noted the influence of “confusing” communications from electric vehicle maker Tesla. The company previously said it would accept bitcoin as a form of payment for its cars before CEO Elon Musk tweeted last week that the firm has “suspended” vehicle purchases with the cryptocurrency over environmental concerns.
Keeping reading to see why they say gold is a better portfolio stabilizer.
Reuters via Kitco News/Arundhati Sarkar
Gold edges back towards multi-month peak as dollar holds near lows
Gold firmed on Monday, edging back towards last week’s 4-1/2-month peak as the dollar held near its weakest since late February, with investor focus turning to key economic readings from the United States this week.
Spot gold was up 0.2% at $1,883.25 per ounce by 1222 GMT, having last week reached its highest since Jan. 8 at $1,889.75. U.S. gold futures gained 0.4% to $1,884.30.
Following last week’s volatility, gold has moved above its 200-day moving average, supported by a weaker dollar and bond yields and questions about inflation, said independent analyst Robin Bhar.
Gold is considered a hedge against inflation. The dollar was pinned near three-month lows, while U.S Treasury yields stayed subdued.
Meanwhile bitcoin rebounded slightly, but was still under pressure following a recent crash.
“The recent slide in cryptocurrencies also boosted the appeal of gold as an alternative investment asset,” said Margaret Yang, a strategist at DailyFX.
“Gold’s upward momentum is very strong and it is likely to challenge a key psychological level at $1,900 in the days to come.”
Continue reading, here.
Yahoo! Finance/Sam Ro
What it means that everyone is talking about inflation
Everyone is talking about inflation.
And that, of course, includes investors.
According to BofA’s monthly Global Fund Manager Survey published last Tuesday, “higher inflation is now the consensus.” And furthermore “inflation is now again the biggest risk for markets,” as initially identified by 35% of the survey’s 194 respondents who manage a combined $592 billion worth of assets.
Translation: Investors are worried about inflation.
But if investors are broadly concerned about inflation, it suggests stock prices are likely already reflecting these risks and investors have discounted, or priced in, inflation risk into the markets.
While it may not be a perfect analog, it’s worth considering what happened during the early stages of the coronavirus pandemic.
.Read the full story, here.