Bitcoin has faced a strong correction over the past week, after highs of $12,000, we saw a correction down to support levels of $10,200 – a 20% drop in price and is seemingly poised to continue its descent as crucial support levels fall.
Despite the drop, Wall Street veteran Raoul Pal, CEO of Real Vision is more convinced of Bitcoin than ever before. In August, the CEO, revealed that he thinks he is ‘irresponsibly long’ on Bitcoin. This comes after he publicly announced that he would be increasing his personal exposure to the asset class to 25%. On September 8th, Pal said that he is ‘over 50%,’ referencing the percentage of his portfolio that is currently in BTC. Previously Anthony Pompliano, a former Facebook team lead and crypto investor, had gone on CNBC saying he has 50% of his assets in Bitcoin. Ongoing macro-economic trends, continuous money printing stimulus and inflations may be the reason why mainstream investors turn to digital assets for alternative asset allocations.
Bitcoin, gold and the stock market
Bloomberg said that as per recent findings, the correlation between Bitcoin (BTC) and gold is at its highest level since 2010. Regardless of the tracking service you use, there is a clear correlation of prices between Bitcoin and gold with similar rise, pullback and movement between the two. Some market analysts also mentioned that the current crash in the stocks market may encourage more monetary stimulus. The recent plunge in Bitcoin and cryptocurrency prices last week were a result of a dip in the NASDAQ tech index. At very high frequency and short-term periods, the correlations between BTC and stock futures are stronger, algo trading may be the underlying driver.