When I woke up, Bitcoin and gold were all going crazy! ​

Source: China Fund News

Reporter Li Di

As people around the world anxiously await the results of the US election, Bitcoin and gold are soaring.

Gold futures stood above the $1,950/ounce mark, while Bitcoin rose by more than $1,000, breaking through the $15,000 mark, setting a nearly three-year high.

Many voices in the market believe that no matter who wins, safe-haven assets such as gold and Bitcoin are winners. Powell’s speech also released a signal of easing, boosting the rise of safe-haven assets.

Recently, Grayscale Asset Management, US payment giant Square and other institutions have significantly increased their Bitcoin holdings. A Bitcoin fund that surged nearly 9% last night has also increased its size by more than $2 billion this year. While investors are aggressively increasing their holdings, voices that are bullish on Bitcoin are also heard.

However, Ray Dalio, founder of Bridgewater Associates, questioned the safe-haven function of Bitcoin, and said that "even gold is not always a reliable safe-haven asset." In his latest speech, he firmly favored the renminbi.

Gold futures surpass 1950 mark

Bitcoin breaks $15,000, hitting a three-year high

Gold futures have reached the $1,950/ounce mark.

Spot gold also once broke through $1,950 per ounce.

Silver futures also rose, surging nearly 7%.

Last night, safe-haven assets began to rise, and early this morning, Powell's speech further boosted the rise in gold and silver.

The Federal Reserve has temporarily remained on hold on interest rates. Fed Chairman Powell said the economic outlook is very uncertain; if the situation worsens and tools are still needed, we will make adjustments.

Fxstreet analyst Yohay Elam said Powell's statement that the pace of economic recovery has slowed suggests the Fed is ready to act.

MarketWatch analyst Greg Robb said the Fed did not take immediate action to help the economy but reiterated that it would use all of its tools and expected the Fed to take more easing measures before the end of the year.

On November 5, Bitcoin also rose strongly, rising by more than $1,000 during the day and breaking through $15,000, the highest level since January 2018.

No matter who wins

Is gold the winner?

According to CNBC, Coast Capital CIO James Rasteh believes that gold will benefit no matter who wins the US election because it means the US government will likely launch a large-scale fiscal stimulus plan.

Rasteh said that the fiscal and monetary policies of Trump and Biden are almost identical, and "the differences portrayed by the two policies are more imagined than real." In other words, once the fiscal stimulus plan is launched, trillions of dollars will be printed, all of which will eventually have a very positive impact on gold.

Frank Holmes, CEO of US Global Investors, holds the same view. He believes that given factors such as the expansion of the Federal Reserve's balance sheet, investors should consider buying physical assets and gold. Holmes expects gold prices to rise to $4,000 per ounce by 2023.

Juan Carlos Artigas, director of research at the World Gold Council, also believes that no matter who wins, loose monetary policy is seen as an important factor in ensuring a proper economic rebound.

A Bitcoin fund rose nearly 9%

This year's scale has grown by more than US$2 billion

Bitcoin broke through a two-year high, and the GBTC fund that specifically invests in Bitcoin also soared.

Since the beginning of this year, the fund has grown fiercely, with an increase of more than $2 billion. Recently, ETFStore Chairman Nate Geraci tweeted that since December 2017, the assets under management of Grayscale Bitcoin Trust (GBTC) have increased by more than $2.8 billion, including $2 billion in 2020, outperforming 97% of exchange-traded funds (ETFs) currently listed in the United States.

Public information shows that Grayscale Bitcoin Trust was launched by Grayscale Assets in April 2018 and is known as "the first publicly listed security that invests solely in Bitcoin and derives value from the price of Bitcoin." Grayscale Assets is the world's largest crypto asset management company. As of October 27, the total size of Grayscale's asset management has reached US$7.5 billion.

Many institutions have recently purchased a large amount of Bitcoin

Amid the US election, Grayscale Assets is continuing to increase its Bitcoin holdings. According to China Times, on November 2, Grayscale Investments' Grayscale Bitcoin Trust increased its holdings by 722 BTC, bringing its total holdings to 481,712 BTC. This is the 14th consecutive working day that Grayscale Investments has continued to increase its Bitcoin holdings.

On October 8, Square, the payment company founded by Twitter CEO Jack Dorsey, announced that it had purchased 4,709 bitcoins for $50 million (an average of $10,600 per bitcoin).

Also in October, Forbes said that asset management company Stone Ridge recently confirmed that it had purchased 10,000 bitcoins through the New York Digital Investment Group (NYDIG).

Currently, NYDIG manages two Bitcoin funds, namely Institutional Bitcoin Fund LP and Bitcoin Yield Enhancement Fund LP, both with a scale of over US$100 million.

On October 21, British fintech company Mode Global Holdings announced that it would hold up to 10% of Bitcoin in its reserves. Mode will become the first listed company in the UK to hold a large amount of Bitcoin.

A CEO leads a listed company to buy Bitcoin

Just bought 2.8 billion, made a profit of 1 billion in less than three months

In August and September of this year, the listed company MicroStrategy spent a total of US$425 million (approximately RMB 2.8 billion) to purchase a large amount of Bitcoin.

In August, MicroStrategy said it had purchased $250 million worth of Bitcoin, and in September, the company's CEO said MicroStrategy had invested another $175 million in Bitcoin.

Estimated at a price of $15,000, the market value of the Bitcoin held by the company has reached $574 million (about 3.8 billion yuan). In less than three months, it has earned 35%, or about $149 million (about 1 billion yuan).

Since asset management giants such as BlackRock, Vanguard Funds, and the Norwegian Government Pension Plan are all shareholders of the company, these asset management giants also indirectly hold Bitcoin.

Before the company bought bitcoin, the company's CEO had already invested in bitcoin with his personal assets. The CEO said that he personally owns 17,732 bitcoins, with an average holding cost of $9,882 per bitcoin.

According to Cointelegraph on October 28, MicroStrategy's Bitcoin investment is reaping huge rewards, with an estimated profit of $100 million. According to data released by crypto researcher Kevin Rooke, from the first quarter of 2017 to the second quarter of 2020, MicroStrategy has earned more from Bitcoin investments than from its actual business in the past three years. Data shows that the 38,250 BTC held by the company were worth about $425 million when purchased in August and September, and with the recent surge in Bitcoin prices, their total value has exceeded $525 million. In the past three and a half years, Microstrategy has only earned $78 million in net income from its business operations.

Many analysts are bullish on Bitcoin

Recently, there have been constant calls for bullishness on Bitcoin.

Analyst Alex Krüger said that a Democratic sweep in Congress or the election of Joe Biden could boost sentiment around Bitcoin, which could rise to $16,000 in the future.

Barry Silbert, CEO of Grayscale Assets, said that “whether Trump or Biden wins, it will benefit Bitcoin.”

Anthony Pompliano, co-founder and partner of cryptocurrency investment firm Morgan Creek Digital Assets, said: "Bitcoin is the biggest winner in the current macro environment. As we have seen, after the market came out of the liquidity crisis in 2008, when the Fed's quantitative easing policy intervened, inflation hedging assets performed very well."

Well-known investor Raoul Pal even recently said that the price of Bitcoin could reach $1 million, becoming an asset class with a total value of up to $10 trillion and potentially surpassing the gold market.

Pal believes that in the future, central banks issuing digital currencies will make Bitcoin a "legitimate part of the system." What Bitcoin can do is revolutionize the global financial system by creating an "internet of money," where systems will be interconnected and talk to each other, just like Apple's iOS operating system and Google's Android system.

Katie Stockton, founder of Fairlead Strategies, noted that “Bitcoin has seen improving short-term momentum in its long-term uptrend, with the next resistance level approaching $14,000.”

He believes that if Bitcoin breaks through $14,000, the next technical level may be at $20,000, a record high. At the moment when Bitcoin has risen above $13,850, it is only one step away from the $14,000 resistance level. If it breaks through the $14,000 resistance level, Bitcoin is expected to rise to a record high.

Dalio is firmly optimistic about the RMB

I don’t think Bitcoin is a good safe-haven asset

Even though more and more voices on Wall Street are bullish on Bitcoin, Bridgewater's Dalio does not recognize Bitcoin's safe-haven value.

On November 2, Ray Dalio, founder, co-chairman and chief investment officer of Bridgewater Associates, the world's largest hedge fund, delivered a speech at the Hong Kong Fintech Week conference and expressed his views.

Dalio said at the meeting, "Currency should be an effective medium of exchange and a store of value, and Bitcoin does not work."

Dalio believes that Bitcoin is currently too volatile to be used as a stable store of value, and projects such as central bank digital currencies have more potential. He also mentioned that even gold has not always been a reliable safe-haven asset over thousands of years of history.

While questioning Bitcoin, Dalio expressed his bullish view on the RMB at the meeting.

“You’re starting to see the development of Chinese capital markets that are open to foreign investors, you’re seeing the internationalization of the renminbi, you’re seeing the opening of the capital account, you’re seeing the development of financial centers, and this is part of a pattern that has happened over and over again in history,” Dalio said. “I think it’s very important for people to step back and understand this cycle.”

Dalio mentioned that in the past, the world's reserve currencies were the Dutch guilder, the British pound and the US dollar. The reason these currencies became reserve currencies was because of trade, and China is currently the largest trading country.

Dalio believes that the RMB will not necessarily become a reserve currency in the short term, but it will happen faster than everyone expects.

Dalio is also optimistic about Chinese bonds and expects the renminbi to benefit from capital inflows. Both the interest rate gap and the economic growth rate gap are favorable to the Chinese bond market.