Veröffentlicht: 23.04.2020

3,000 USD an ounce? How a rising gold price can affect the BTC

Bullish forecast of the Bank of America

The Bank of America sets the 18-month price target for the coveted precious metal at a target price of USD 3000 per troy ounce. In a report entitled “The FED Can’t Print Gold”, specialists Michael Widmer and Francisco Blance explain how they arrived at these results. Should this forecast be confirmed in the coming months, it could also have positive consequences for Bitcoin. We take a look at the events.

Bank of America report

In the report published on 21st April the experts expect the gold price to rise. The coronavirus pandemic and a weakened economy are putting the FIAT currencies under increased pressure. As a result the “safe havens” could become increasingly popular. The analysts assume that investors will primarily focus on the popular precious metal.

Current gold price

At the time of this article, the gold price is at a value of USD 1696 per troy ounce. Should the experts be right, the gold price would reach an absolute record high. This year, the price of gold has already risen by a whopping 12%. But why are investors currently desperately looking for safe investment options?

Reasons for gold

Due to its limited deposits, the coveted precious metal has been considered a safe store of value with a low inflation rate for decades. In contrast to normal FIAT currencies, the gold deposit cannot be manipulated. The current economic situation makes insecure investors look for safe alternatives. Again and again the focus is on the “digital gold”, the Bitcoin.

Bitcoin as “Store of Value

The No.1 crypto currency has many similarities to gold. Both goods are mined. However, Bitcoin mining has little to do with open-cast mining. Crypto-Miners mine BTC entities with the help of high-quality equipment and lots of computing power. Huge mining farms from Asia dominate the business. With a brilliant move, Satoshi Nakamoto established a fixed upper limit of 21 million BTC in the BTC White Paper. This makes digital currency, similar to gold, a limited commodity. At the moment the inflation rate of the first crypto currency is about 3.65 %. This figure will be reduced even further in a few weeks due to the pending halving.

Halving comes towards Bitcoin

Due to the imminent halving of the coin rewards, the inflation rate will level off at around 1.8 % in just under 3 weeks. From then on, miners will receive “only” 6.25 BTC per mined block (current reward: 12.5 BTC). The low inflation rate, the high degree of decentralisation and the limited occurrence make Bitcoin, in theory, a unique store of value that can be easily transferred across the globe.

Bitcoin price current

At the moment the Bitcoin is moving at the 7000 USD limit. In recent weeks, we have observed a strong correlation with the traditional markets. The focus of investors is on the major stock indices, which are currently recovering from the consequences of the COVID 19 pandemic. At least at first glance, this is what it looks like. However, many experts still believe that the current price recovery is part of a solid bear market. Every day, news about drastically rising unemployment figures in the USA is circulating through the news, while the Down Jones seems to be climbing upwards without any problems. Despite helicopter money and other rescue packages, this picture hardly fits together.

Conclusion

Should the Bank of America’s forecast prove to be true, a rising gold price could have a positive influence on Bitcoin. Due to its “small” total market capitalisation of around USD 200 billion, the BTC is currently being carried away by the traditional markets. Whether the precious metal could have a similar effect remains unclear. Perhaps Bitcoin could also set its own accents earlier through the upcoming halving.

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