Stocks opened higher this morning and held on to their gains through midday. With Congress getting desperate, bulls believed a stimulus deal was imminent.
Meanwhile, lawmakers continued to claim that talks were going well.
Thus far, however, no agreement has been struck. But that hasn’t stopped inflation hedges like gold, silver, and Bitcoin from soaring.
The latter of which just hit $23,000 – a new record high that crypto-critics once called a speculative fantasy.
But today, fantasy quickly became reality. Crypto’s top coin managed to surge in dramatic fashion, blowing past key resistance over the last 24 hours with ease.
Back in 2017, when Bitcoin enjoyed its first breakout rally, economists were quick to compare the run-up to “Tulip Mania.” It was a famous period of the Dutch Golden Age, in which speculators caused tulip bulb prices to skyrocket before they rapidly collapsed shortly after reaching the peak.
These days, though, the tulip comparisons have ended. Instead, analysts now say Bitcoin may have finally matured.
“There will no doubt be comparisons of tulips and Bitcoin in the days/weeks/months ahead,” wrote Kit Juckes, macro strategist at French investment bank Societe Generale.
“In my mind, the tulip mania became a speculative bubble, rather than an odd but harmless pastime for rich lovers of flowers, when people were buying in the hope of making a quick profit, and were mostly buying on credit.”
Juckes continued, adding:
“In this regard at least, Bitcoin is different because even now, most activity is ‘buy to hold’; by people who believe it is the natural competitor to gold as a store of value in a time when central banks are playing footloose and fancy-free with fiat money.”
He also said that “Bitcoin has been around long enough that it probably isn’t going away,” and “if this does become a speculative bubble, it can get pretty wild before it bursts.”
So, in the mind of at least one experienced strategist, Bitcoin’s yet to enter another true bubble.
But others, like noted gold bug and Bitcoin-opponent, Peter Schiff, said a month ago that’s precisely what’s coming for the crypto market.
“Comparing the return on Bitcoin to return on gold is irrelevant, as #Bitcoin and #gold have nothing in common,” Schiff tweeted, defending his favorite precious metal.
“They are not competing assets. It’s like comparing the return on gold to the return on Tesla. During bubbles, lots of assets beat gold. Gold wins once those bubbles pop”.
Since Bitcoin crested $20,000, though, he’s remained mostly silent about the matter.
And while Schiff’s been wrong about Bitcoin’s ascent, that doesn’t mean he’s a fool. Over the last few months, Schiff’s been warning investors about an ever-weakening dollar – a prediction that’s come true.
His recommendation? Load up on gold.
In the long run, it’ll likely prove to be good advice. But that doesn’t mean investors should only buy gold and not Bitcoin, too.
Dollar bears should instead heed the words of a wise-beyond-her-years young lady, featured in a once-popular Old El Paso taco shell commercial from years ago. In it, her family debates whether soft shell tacos are superior to hard shell variety.
To which she responds:
For anyone concerned about the dollar, it’s sage wisdom. Bitcoin and gold may look like competitors, but really, they’re complementary assets. Even Schiff admits this as well.
When one rises, the other has followed suit. Still, gold purists insist that there can only be one inflation hedge long-term.
And, more importantly, that it isn’t Bitcoin.
Fundamentally speaking, that argument can certainly be made. But investors who stuck to precious metals missed out on the major crypto rally, in which Bitcoin jumped 220% higher on the year.
All while gold only rose 20% over that same period, frustrating plenty of “no-coiners” in the process.
