Bitcoin dances to the same tune as gold, says TimmerFidelity. But is it overheated at $30K?
Timmer suggests that Bitcoin is now marching to the same rhythm as gold but warns that the leading cryptocurrency may have gotten a bit ahead of itself, hinting at potential overvaluation at the $30,000 mark.has highlighted an 88% inverse correlation between Bitcoin and the two-year real TIPS yield, and a 63% inverse correlation to the PCE-derived real rate.
In layman's terms, what Timmer is suggesting here is that Bitcoin's price tends to move in the opposite direction of these two economic indicators. If the returns on certain government bonds go up, or if inflation rises, we can expect the price of Bitcoin to generally go down, and vice versa. It is important to note, though, that these are just tendencies; they do not happen every time, and other factors can also influence Bitcoin's price.
The executive's insights shine a spotlight on Bitcoin's strong correlation with gold, but his caution about Bitcoin's potential overvaluation emphasizes the need for investor prudence. The Bitcoin price has dropped to its lowest since March 17, with an over 12% decrease since May 6, decoupling from traditional risk assets like the Nasdaq.
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