Bitcoin and Gold are now becoming the assets of choice as predictions surface regarding the shrinkage of advanced economies in excess of 35%.
Goldman Sachs predicts the biggest three month economic retraction in history is coming up. They think the 2008 crisis is going to pale in insignificance to the Covid-19 crisis.
Unlimited quantitative easing is not going to help matters. Fighting the impact of Coronavirus with money printing will result in huge inequalities between the rich and the poor.
Meanwhile Gold continues to climb. On Tuesday, XAU/USD hit 7-year highs of $1,720, sealing monthly gains of 14%. The precious metal is now within $100 of its all-time highs seen in 2011.
Bitcoin reversed its losses in response to the stock market futures dipping on Tuesday this week heading back towards $7000. It is now up 90% since the beginning of 2020. “Bitcoin has been building up momentum,” Mati Greenspan, senior market analyst at social trading firm eToro, told CNBC via telephone. “Ever since the mid December lows, we’ve actually doubled in price.”
The digital currency could soar because bitcoin is still in the early part of its cycle. Bitcoin was once worth nearly $20,000 in late December 2017, before a massive slump last year.
The analysts did not account for a “Black Swan,” a term for an improbable and unforeseen event. Instead, it explored the idea of a “Great Moderation,” which is characterized by low volatility, sustainable growth and muted inflation.
As people begin to wonder what their next steps should be it seems the experts themselves are struggling to predict what the best course of action should be. This makes for a volatile situation where hedging ones money in traditional safe havens might not be as safe as was once considered.