Is This the Local Bottom? Or Is There More Pain Ahead?
Bitcoin is holding up relatively well, but the same canโt be said for altcoins. People still believe this is a full bull market because Bitcoin is performing, but hereโs an interesting thought: What if everyoneโs looking at this the wrong way? What if Bitcoin can no longer really be considered โcryptoโ but instead โdigital gold,โ as many are now calling it, especially since itโs been included in the U.S. strategic reserveโand potentially other countriesโ reserves tooโas a new hedge against inflation to replace gold? Deutsche Bank recently said Bitcoin is โlike gold,โ and the U.S. strategic Bitcoin reserve โcould set international standards.โ If so, weโd need to look at how gold has performed in bad economic situations and what the cause was. Hereโs some brief data we pulled on that: 1929 Great Depression (Stocks -89%, 1929โ1932):ย Gold didnโt trade freely (fixed at $20.67/oz until 1933), but after FDRโs revaluation to $35/oz in 1934, it effectively โgainedโ 69% in nominal terms. 1973โ1974 Bear Market (Stocks -48%):ย Gold +72% (inflation-driven). 1987 Black Monday (Stocks -23% in one day, -34% peak-to-trough):ย Gold +5% over the year. 2000โ2002 Dot-Com Crash (Stocks -49%):ย Gold +12%. 2008 Financial Crisis (Stocks -57%, 2007โ2009):ย Gold +25%. 2020 COVID Crash (Stocks -34% in March):ย Gold +13% (FebโAug 2020 peak). So, if Bitcoin is โgoldโ, and the altcoins are โstocksโ, one could say the data tells a similar story as right now, with many altcoins and stocks down bad, but Bitcoin holding relatively well. Then again, thatโs just a thought. As it stands, Bitcoin has formed a bullish divergence on its RSI on the daily chart, which technical analysts will tell you is a positive sign. Things started looking up yesterday after U.S. inflation numbers beat expectationsโanother extremely bullish signal. But it wasnโt long before Trump started talking about tariffs again, sending the market back down. Itโs almost like heโs trying to squash every little piece of hopium the markets get to push his long-term plan. President Trumpย declared, โFinancially, we will be stronger than ever before; I think the markets are going to soar.โ