Fed Hikes To Even Out The Price Gap Between Gold And Bitcoin - Bloomberg Intelligence
(Kitco News) - Just under a year ago an ounce of gold cost the same as one bitcoin, said Bloomberg Intelligence's Mike McGlone, adding that prices are about to converge once again as the Federal Reserve proceeds with its monetary policy tightening this year.
Fed rate hikes played a big role in gold and bitcoin’s paths this past year, McGlone said in a note on Monday, specifying that December rate increase revealed bitcoin’s top and gold’s bottom.
After the December hike, bitcoin tumbled from its record-high of almost $20,000 and gold rallied from $1,240.
This trend is unlikely to break anytime soon, added McGlone, noting that the price gap between the two assets will continue to shrink.
“Getting past imminent Fed tightening, increasing inflation and the weak dollar are all gold-positive, while the opposite, mean reversion, is bound to continue overwhelming bitcoin,” he said.
On top of that, bitcoin will continue to battle regulatory uncertainty, which will keep the pressure on prices.
The cryptocurrency tumbled during the North American trading session in reaction to the latest advertisement ban announced by Google.
The tech giant said on Wednesday that it will ban ads for unregulated or speculative financial products, such as cryptocurrencies, initial coin offerings, crypto exchanges and cryptocurrency wallets.
“Improving the ads experience across the web, whether that's removing harmful ads or intrusive ads, will continue to be a top priority for us,” Scott Spencer, director of sustainable ads at Google, said in a post.
The ban follows a similar step taken by Facebook in January when the company said it will not allow ads that promote any financial products or services that advertise cryptocurrencies or coin offerings.
Kitco’s senior technical analyst Jim Wyckoff forecasts further drops in bitcoin prices in the short term.
“The recent downside price pressure and then a pause have created a bear flag pattern on the daily bar chart. That suggests more selling pressure in the near term,” Wyckoff said in his Bitcoin Daily Chart Alert.