Inflation is now said to be out of control globally, as rates peaked at 9% in the UK and the US M1 money supply increased. The equity market has been hit hard, with Nasdaq wiping out more than $7 trillion in the past four months.
Mike McGlone, senior analyst at Bloomberg Intelligence, said:
“If stocks slow down, Bitcoin, gold and bonds could dominate.”
McGlone shared the chart below to back up his claim.
The source: Twitter
This spread chart shows the yield on the US 10-year Treasury note (orange) and the price Bitcoin against the NASDAQ 100 for the past 4 years (white). At the bottom of a bear market Bitcoin around 2018, the chart illustrates a double bottom rate of 0.5 before rising to 2.0 in early 2021.
Ability Bitcoin holding a 2.0 rate since January 2021 suggests it's doing well amid a possible first recession in years. The last prolonged global recession was caused by the 2008 financial crisis, which was a year before Bitcoin born.
Since its inception, Bitcoin has thrived in a thriving global economy. The difficulties caused by COVID-19 at the beginning of 2020 were solved by the US authorities by injecting trillions of dollars into circulation and most of it has entered the cryptocurrency. As the world is dealing with the impact arising from the rapid increase in the money supply, Bitcoin seems to hold its ground against other venture capital investments.
"The bigger risk in about a year's time could be deflation," McGlone stated. However, he continued to focus on the possibility that Bitcoin and gold could outperform the market in the near future.
“After a prolonged period of positive performance, it is long overdue for the equity market to enter a period of underperformance that could help gold and Bitcoin emerge. The BOLD1 Index (gold, Bitcoin combo) has caught up with the Nasdaq 100 Stock Index in the bull market and with less volatility.”
The chart below shows the decrease in volatility of the BOLD1 relative to the NASDAQ 100 index since 2019.
The source: Twitter