Bitcoin (BTC) has been incurring significant selling pressure over the past several days that has put its recently found position within the five-figures in grave jeopardy, and its inability to find any strong support around its current price levels signals that further losses are highly likely.
Despite this technical weakness, analysts are noting that Bitcoin’s status as “Gold 2.0” appears to be strengthening amidst growing global instability, which could mean that BTC will incur greater bullish momentum as the global economy weakens.
Fed Chairman Powell Believes Bitcoin is More Like a “Gold 2.0” Than a Currency
Earlier this month, the crypto industry was surprised to learn that one of the most powerful people in the global economy – Jerome Powell, the chairman of the Federal Reserve – noted during a US Senate hearing that he believes Bitcoin is more like Gold than it is a currency.
Importantly, Powell noted that BTC has not garnered any significant utilization as a currency but has rather found itself being primarily used as a “speculative store of value,” much like Gold is.
“Really almost no one uses bitcoin for payments — they use it as an alternative to gold. It’s a store of value, a speculative store of value, like gold,” he explained.
Analysts and industry experts generally agree with this assessment, as Marcus Swanepoel, the CEO of cryptocurrency platform Luno, said that investors are generally viewing major cryptos like Bitcoin and Ethereum as uncorrelated assets.
“As the geopolitical situation remains so uncertain, strategic investors are still looking at bitcoin and Ethereum as uncorrelated with centralized assets, so they provide a quasi safe-haven option,” he said while speaking to Business Insider.
Could Weakening Global Economy Spark Bullish Movement for BTC?
Although there is much debate as to whether or not the global economy is robust at the present, or if it is flashing some warning signs to investors, analysts do believe that Bitcoin could benefit greatly from any major bearishness in the global economy.
Kevin Kelly, a former equity strategist and the co-founder of Delphi Digital, explained in a recent tweet that BTC’s “digital Gold” narrative is strengthening.
“Digital Gold Narrative Strengthens – ‘Alts’ take hit but #bitcoin holding up *relatively* well – Current macro backdrop strengthens bullish narrative for $BTC as LT option on digital gold – Recession risk – market says Fed rate cuts all but guaranteed,” he explained while referencing the data from a Delphi Digital report.
Digital Gold Narrative Strengthens
🔸"Alts" take hit but #bitcoin holding up *relatively* well
🔸Current macro backdrop strengthens bullish narrative for $BTC as LT option on digital gold
🔸Recession risk⬆️– market says Fed rate cuts all but guaranteedhttps://t.co/QTCXAcOwGg pic.twitter.com/gIZ3x7hBvK
— Kevin Kelly, CFA (@Kevin_Kelly_II) July 23, 2019
As Bitcoin continues to face growing volatility, it is highly likely that the markets will soon gain a better understanding of whether or not the Gold 2.0 narrative will be enough to lead BTC on another parabolic upswing.
Featured image from Shutterstock.