Macro Analysts Say Trillion-Dollar Tidal Wave Set to Flee Government Bonds for Bitcoin and Gold

Spread the love

Weiss Ratings analysts are predicting a trillion-dollar asset migration away from bonds and into Bitcoin and gold.

In a new post on the macro economy, Juan Villaverde and Bruce Ng say bonds have lost their luster in the financial markets.

As a rule, institutional investors have traditionally allocated 30% of their portfolio into bonds as a hedge against insane market dips, however, as the economic landscape has shifted, Villaverde and Ng say this strategy is clearly out of date.

“… the hedge doesn’t work anymore. That’s because decades of hyper-growth in world debt markets. That plus massive money-printing to prevent them from collapsing… has totally changed the financial landscape.

After inflation, gov’t bond yields are near (or below) zero – and will continue to be for the foreseeable future. Even before subtracting inflation, yields are already near-zero or negative. As a result, the classic bond hedge is now broken.”

The analysts highlight the failure of bonds to prop up company assets during the Covid-19 dump this past spring. While they did have a small pump during the market crash, the gains only amounted to one third of the dip that the S&P 500 took.

As their utility seemingly wanes, the analysts expect at least a fraction of funds traditionally allocated to bonds to shift into Bitcoin and gold.

“As we write, roughly $30 trillion is sitting in government bonds. Suppose 10% of that amount finds its way into gold and Bitcoin. That works out to an exodus of $3 trillion. And if that is split evenly, we’d end up with…

$1.5 trillion going into gold – which is 15% of gold’s market cap (now about $10 trillion). And…
$1.5 trillion going into Bitcoin – which is 4.4 times its market cap (now about $338 billion).”

Other market analysts agree with the pair’s findings. Preston Pysh tells his 120,000 Twitter followers that those who believe that the most important Bitcoin narrative of the moment is that it is replacing gold have got it all wrong.

RECOMMENDED READ:  Organizations File Lawsuit Against New York Town to Prevent Bitcoin Mining Facility Expansion

“People saying Bitcoin is just replacing gold, total miss the big mark. This is ALL about bonds. Good luck convince the people owning 100 trillion in bonds – which yield nothing – to keep holding when their future face value & coupons are locked in fixed fiat “value”.”

DTAP Capital founder Dan Tapiero, responded to Pysh in whole-hearted agreement.

“Thank you Preston. Non-financial market people do not understand that we have an overall SHORTAGE of stores of value available in the markets. IE there are not enough of them available for investors. GOLD not losing its SOV premium any time soon, unlikely in my LIFETIME.”

Though none of the analysts purport that Bitcoin will replace gold entirely, if gold and Bitcoin equally receive a fraction of funds traditionally invested in bonds, Bitcoin stands to gain from that shift much more than gold, first, because it has a much lower market cap and second, because Bitcoin has a fixed supply, which can only shrink as demand rises.

 648 Interactions,  6 today

READ ALSO:
What is the concept of Crypto Arbitrage? – Earn Money With Cryptocurrency

Where there is a price gap between two or more exchanges, there is an opportunity for cryptocurrency arbitrage. Arbitrage is Read more

Central Bank of Nigeria (CBN) and Nigeria’s SEC iin talks about crypto regulation, 2020 crypto guidelines  suspension unchaged.

The Securities and Exchange Commission (SEC) of Nigeria has reported that discussions with the Central Bank of Nigeria (CBN) about Read more

Bank of Korea’s Governor is the first to criticize the “limitations” of crypto-assets.

In South Korea, there has recently been a large increase in crypto-investments. Unlike in the United States, regulatory authorities in Read more

Bitcoin Price Movement Analysis for 16th April, 2021

Today, the Bitcoin price is plummeting as buyers race to win after it hit an all-time high of $64,945. Bitcoin Read more

The Nigerian Securities and Exchange Commission (SEC) claims that the central bank’s crypto ban has caused business disruption.

The Nigerian Securities and Exchange Commission says it is collaborating with the central bank to develop a regulatory system for Read more

RECOMMENDED READ:  Ethereum price edges closer to a new all-time record as Bitcoin solidifies
Finance authorities dismiss cryptocurrencies, in the wake of Coinbase’s IPO celebrations

Economic gatekeepers are taking a closer look at blockchain as mainstream coverage of the Bitcoin bubble and Coinbase listing intensifies. Read more

Romanian university intends to consider cryptocurrency payments for admissions fees.

The academic college, which has about 11,000 students, stated that the inclusion of crypto payments was part of a campaign Read more

Bitcoin Price Movement Analysis for 11th April, 2021

Is Bitcoin nearing its peak? It's unlikely. Many on-chain measurements revealed that, although Bitcoin was highly bullish, it had not Read more

Fidelity’s Tom Jessop on why Crypto has reached a “tipping point.”

The crypto market has gained traction as a result of low interest rates and fiscal stimulus, according to a Fidelity Read more

How arrests for attempting to obtain a hitman and a nuclear bomb demonstrate that the dark web is not always anonymous.

Paying with cryptocurrency does not guarantee your safety. Most of the criticisms levelled at cryptocurrencies is that its difficult-to-trace existence Read more

Bitcoin, BTT, Dogecoin Price Movement Analysis for 7th April, 2021

Bitcoin was expected to remain above the $55,800-support, a level that coincided with its 200-SMA. BitTorrent Token was projected to Read more

Leave a Reply

Contact Us