The Interconnection Between Gold, NASDAQ, and Bitcoin
In the world of economics, understanding the connections between different financial assets is crucial. A prominent American economist recently shed light on the intriguing relationship between gold, the NASDAQ, and Bitcoin. He highlighted how movements in the NASDAQ could potentially impact Bitcoin’s value, while also discussing the inverse correlation between gold and the NASDAQ.
NASDAQ and Bitcoin: A Correlated Journey
Peter Schiff, a well-known Bitcoin skeptic, shared his insights on social media, emphasizing the potential impact of a bearish NASDAQ on Bitcoin’s price trajectory. He noted that when the NASDAQ experiences a downturn, Bitcoin tends to follow suit. According to Schiff, the NASDAQ has recently dipped by 12%, which could herald a significant downturn for Bitcoin if historical patterns hold true.
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Schiff elaborated on this correlation, suggesting that a 12% drop in the NASDAQ could translate to a 24% decrease in Bitcoin’s value. If the NASDAQ were to fall by 20%, Bitcoin might drop to approximately $65,000.
Historical Market Trends
Delving into historical data, Schiff pointed out that during past bear markets, such as the Dot-com bubble burst, the NASDAQ fell by nearly 80%. In the 2008 financial crisis, it plummeted by 55%, and during the pandemic crash in 2020, it dropped by about 30%. These patterns suggest that if the NASDAQ enters a bear market, the decline could be substantial.
Schiff speculated that an average decline of 55% in past bear markets could see Bitcoin’s value dropping significantly. Even a 40% decline could push Bitcoin down to around $20,000, potentially accelerating further collapses.
Gold’s Resilience Amidst Market Fluctuations
While Schiff maintains a cautious stance on Bitcoin, he offers a more optimistic view of gold. He highlighted a negative correlation between the NASDAQ and gold, noting that since the NASDAQ’s peak in December 2023, gold has appreciated by 13%. This trend suggests a nearly perfect one-to-one correlation.
Schiff posited that if the NASDAQ were to drop by 40%, gold could soar past $3,800. He further speculated that if a bear market coincides with a weakening dollar, gold prices might rise even higher.
Comparing Gold and Bitcoin
Schiff argued that even if gold reached $3,800 and Bitcoin dropped to $20,000, Bitcoin would see an 85% decrease in value compared to gold. This could undermine the notion of Bitcoin as a reliable store of value akin to gold.
He predicted that governments and investors might lose faith in Bitcoin, leading to widespread sell-offs that could have severe consequences for entities heavily invested in the cryptocurrency.
Currently, Bitcoin is trading at $82,433, boasting a market capitalization exceeding $1.6 trillion.
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