Technical Charts Show Bitcoin Is Taking Liquidity Away from All Other Financial Markets

October 28, 2020

Technical trading charts published by Wall Street investor and Bitcoin evangelist, Raoul Pal, are displaying a clear trend that all investments tied to central authorities are going to fall prey to. Bitcoin is gaining ground on the most traditional and stable investing markets the world has ever created. It’s clear that 2020 is becoming a milestone year in the history of Bitcoin and now the world’s leading cryptocurrency is officially proving that investors have faith in it as a store of value.

 

Bitcoin vs. Financial Markets: The Tale of the Tape

The published comparison details Bitcoin’s recent performance against financial markets that hold significant weight across the broader global economy. Gold, silver, the NASDAQ, the Treasury Bond ETF Fund and Amazon’s stock price are just some of the assets and indexes that are compared directly to Bitcoin.

 

The Technical Charts All Display a Similar Pattern

A gold vs. Bitcoin chart dating back to September, 2017 shows that as of this past September, the value of gold relative to Bitcoin is sitting at about one third of what it was in 2017. Much of Bitcoin’s ability to close that gap comes in large part thanks to the boom that occurred in December of that year, with the all-time price of bitcoin reaching close to $25,000 Canadian.

It makes sense then that the same drastic drop between other financial markets and Bitcoin is evident when reviewing the same duration on the NASDAQ and Amazon vs. Gold charts. That said, there are a few factors allowing Bitcoin to thump traditional financial markets.

 

Other Factors to Consider

Much is being made regarding the upcoming U.S. Presidential election next week. Add that to all of the stimulus measures governments are implementing all around the world and you have the potential for not only the devaluation of government-backed currencies, but also prolonged periods of lower and lower interest rates.

These factors contribute to the depreciation of index funds like the iShares 20+ Year Treasury Bond, and a broader depreciation of financial markets. That’s why when you look at the charts Pal is publishing, they each start with a huge widening of the gap between Bitcoin and other assets at the end of 2017, followed by a steady and continuing increase of that gap in the time thereafter.

 

What the Future Holds for Bitcoin and Financial Markets

It’s abundantly clear that investors are facing tumultuous times both in the cryptocurrency world and within traditional financial markets. But what’s also clear is that the future is bright for cryptocurrencies. That reality is starting to hit institutional investors and governments. Perhaps it’s only a matter of time before Bitcoin’s price action decouples from the stock market.

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