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![]() According to a research paper by Bloomberg, the upward trend of the precious metal may drag bitcoin ![]() 01.Jul.20 10:22 AM By Shawn Highstraw Photo toinnov.com |
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Morgan Stanley, JP Morgan and Goldman Sachs all expect the gold price to continue to rise until 2021. According to a research paper by Bloomberg, the upward trend of the precious metal may drag bitcoin.
The same forces that support gold support bitcoin, but the crypto's offer is more limited. Adoption remains the default metric, and our indicators remain positive. Morgan Stanley, JP Morgan and Goldman Sachs attribute the positive sentiment around gold to three main factors:
Dollar devaluationLisa Shalett of Morgan Stanley Wealth Management expects the dollar to approach its peak. She writes that if the value of the dollar falls, it will be beneficial to add gold to your portfolio.
But whether the US dollar will fall in the short term remains uncertain. The USD continues to dominate international financing markets, according to the Bank of International Settlements.
Economy uncertainty
Goldman Sachs analysts say uncertainties surrounding the recovery of the economy will drive investors towards gold:
Shalett recognizes it:
JP Morgan writes the same in a note to their clients. In early May, the bank's strategists said investors could view gold as a hedge against economic uncertainty.
There are many variables that can cause a decline in both the economy and the stock market. High unemployment, declining business productivity and fears of a second wave of the pandemic could cause the economy to collapse. The perception that gold is a safe haven makes gold preferable to cash and bonds.
Physical gold
Strategists also predict that the demand for physical gold will increase. Gold is used in various products, such as jewellery and electronics. The disruption of the supply chain, especially in areas where no gold is produced, can cause a shortage. Nicholas Thompson of Morgan Sanley:
Bitcoin adoption in 2021
And what about bitcoin? Since early 2020, institutional investors have been buying large amounts of bitcoin through the Grayscale Bitcoin Trust. Grayscale buys a lot of bitcoins and can therefore serve many institutional customers. This fund is one of the few ways for US investors to invest in bitcoin.
Bloomberg writes in the same report that there is an increasing correlation between bitcoin and gold:
A confluence of increasing institutional adoption and the demand for gold could lead to a resurgence of bitcoin in 2021. |