Bitcoin is not receiving adequate attention from institutional investors who still consider gold and bond yields to be safe trading assets.
Bond Yields Or Bitcoin?
Yesterday, the German 30 –year bond yield dropped below -0.70% for the first time. This is a clear implication that investors are all set to grab them before they dip even lower. Further, the collapse can be based on the popularity of these assets as a safe-haven. Interestingly, Bitcoin seems unperturbed by this. The primary reason is that institutions are still not ready to play it big with Bitcoin. The volatility is among the least of concerns when it comes to this case. In reality, lack of regulation and acceptance is the key reason behind it.
Consolidation in Bitcoin price has made several investors anxious. As a period of consolidation is followed by a sharp upward or downward trend. Considering, the price of Bitcoin trading below the 50-day moving average, it is clear that bears will rule the roost and the consolidation will show a steep downward trend. More importantly, the question which is yet to be answered, will the downward trend continue?
Does Eurozone Need a Financial Overhaul?
It is true that since the financial crisis, central banks around the globe are keen on developing methods to accelerate growth and help the world economy recuperate losses in the short term. However, investors have seemingly lost their trust in this mechanism. The deep-rooted issue is the imbalance of the financial system in the Eurozone. Having said that, Bitcoin can be a close second, but it surely doesn’t bag the first place when it comes to being called the “ultimate safe-haven asset”.
Italian political and economic turmoil has started taking effect as bank shares dropdown. These shares have further dragged down Europe’s main share markets.
Giuseppe Sersale, a fund manager at Anthilia Capital Partners said,
“It’s a market that is totally in panic”. He further noted “a total lack of confidence in the outlook for Italian public finances”.
Furthermore, the Fed is under tremendous pressure to utilize its monetary policy tool and cutting interest rates. Interestingly, President Trump has time and again pointed out to states where one gets paid to borrow money- a dicey condition when it comes to harboring an economy.
The Fed is aware of its implications, thus the hesitation on their part. But, how long can this be avoided and resisted?