Bitcoin (BTC) may be lower than 30% to the current high of $ 69,000, but it has become one of the best financial products by 2021. BTC is better than the US benchmark, S&P 500 gold.
Arcane Research notes in its new report that Bitcoin performance has been circulating 73% from the beginning of the year to date. In comparison, the S&P 500 is up 28% and gold is down 7% at the same time, indicating the third consecutive year that Bitcoin has won them all.
Bitcoin vs S&P 500 vs Gold 2021. Source: Arcane Research, TradingView
The rise in prices is based on the promising outcome of Bitcoin. In November this year, the Consumer Price Index (CPI) in the United States showed the largest growth in the last 40 years in 12 months.
“Most economists are not happy with the forthcoming inflation, as evidenced by the prospect of rising consumer prices next year,” Arcane’s report added, adding:
“With its 73% growth in inflation in 2021, Bitcoin has established itself as one of the best inflation.”
Inflation 2021: Expected CPI vs. Exact CPI. Source: BLS, New York Feed.
Bitcoin Holdings Develops Among Institutional Investment Instruments
Uncertain monetary policy and rising fears of rising prices have also led major financial institutions to launch cryptocurrency trading cars in 2021 for their wealthy clients.
This year, Arcane reported $ 140,000 BTC (~ $ 6.56 billion) through Bitcoin Spot and Futures Exchange Trading Funds (ETFs) and backed by physical Exchange Trade Products.
Currency trading on bitcoin exchange. Source: ByteTree, Arakin Research
It also encouraged other bitcoin units to be attracted to investment vehicles, highlighting the high demand for cryptocurrency institutions.
In contrast, gold-based EFFs accounted for 8.8% to $ 2021 billion, according to a World Gold Council report released in December.
Global flow of gold-backed ETFs. Source: World Gold Council.
Inequality behind high performance?
Thus, the strong performance of Bitcoin is included in 2021 during peak periods of uncertainty.
Many analysts believe that a major change in value prevents Bitcoin from becoming a sufficient barrier to inflation. These include Leonard Kostovsky, a professor of finance at Boston College, who noted in his book that there are 13 days in 2021 when the price of BTC increased by more than 10% in one direction. He wrote:
“It seems absurd to think that someone who is struggling to hold on to the dollar because they lost 7% of their value in the past year would be free to keep Bitcoin that they can (and often does) all in one day. Very valuable.” By Rainey ههههههههههههههههههههه
Arikin also acknowledged that Bitcoin was no more flexible than the S&P 500 in 2021, noting that cryptocurrency “as risky as yours,” only fuels the movement of the key stock markets.
Researchers have named VIX as an alternative to the S&P 500 index, an astonishing measure expected to explain the relationship between Bitcoin and stock markets. He noted that the value of BTC declined as the VIX count increased more recently, indicating why institutional investors see Bitcoin as a risk factor.
Bitcoin vs VIX. Source: Arcane Research, TradingView.
As a result, the possibility of further depreciation of Bitcoin following the restructuring of the stock market was also raised. Arikin also notes that the bearish year could end up removing most of the Bitcoin profit for the 2022 S&P 500.
“So keep in mind the following windows in the stock market next year and the potential for complicating Bitcoin to short-term value,” he added.
Related: Arcane research releases its crypto specs for 2022
But Chris Brown, a senior member of Aristides Capital, went so far as to predict Bitcoin’s total collapse in 2022. He said cryptocurrencies could be shut down for sale as the US Federal Reserve spends its $ 120 billion monthly assets buying program. Three levels go up next year.
Weekly price chart BTC / USD versus Federal Reserve balance sheets. Source: TradingView
“If the Fed raises prices, enough to make money, or if the markets believe it will, you will find that some speculative positions will suddenly disappear,” Brown said, adding:
“An important example of this analogy in cryptocurrency assets is the ‘economy’ of $ 2.64 trillion which is unsupported and out of cash.”