The global markets slumped on January 12, 2017 after a news conference by President-elect Donald Trump. Assets declined across the globe with European, Asian shares and S&P 500 futures all falling, while the dollar slumped against most currencies. The conference disappointed the institutional investors with reveals to very little details as to economic and trade plans. This element of uncertainty resulted in a major slump in US dollar trading after recovering from a three week low. Surprisingly even after so much market commotion, the Bitcoin price remained unaffected despite so much market activity. Let’s look into why Gold reigned while Bitcoin was left behind during the latest market collapse:
Bitcoin stagnant as uncertainty looms:
The year had a lot of surprises that came as backlash for Bitcoin’s Bull Run which neared the all-time high start of this year. Firstly when the prices approached all time high, panic associated to Chinese policies led to the first stage of the collapse. After briefly trading at $900 range for quite some time the next collapse occurred a couple of days later. This was majorly due to the news that Peoples Bank of China has acted on Bitcoin regulation in 2017. They have contacted exchanges to monitor the process in order to avoid currency getting out of the country.
Following the second crash, Bitcoin has formed some kind of support around $750 and has been trading in the area ever since. It remained unaffected during the Yuan’s fall and the global market’s pandemonium since the investors are looking at it cautiously now. After trading sufficient volume and building a strong support, it might finally take off and adhere to the conventionally observed fundamentals.
Gold returns as the only ‘Safe Haven’:
Gold spiked up to over $1,200 after Wednesday’s shift in market dynamics. The price jump for a mere market scare can be attributed to Bitcoins unavailability during this time. The fact that Bitcoin rallied upto the high but wasn’t able to breach it significantly has left an element of doubt in the minds of institutional investors. Hence the general inflow of funds has been redirected to Gold, retaining its status as reliable asset. Whether Bitcoin would be able to displace Gold again as a security asset or Gold will continue to dominate this sector, only time will tell.