It’s a red day for cryptocurrencies this Monday as the two top flagship coins, Bitcoin Ethereum, start out significantly down from prior prices.
After falling from $6500 before Thanksgiving to $4000 in the new year, Bitcoin has now fallen from $3500 last week to $3400 and change today. At the same time, Ethereum, which was pushing up above $120 just weeks ago and $160 just months ago, is now down to $102.30 at press time.
Traders looking at major news on crypto today have a clue as to what might be driving this bearish trend.
First, we reported last week on VanEck’s withdrawal of its Bitcoin ETF application, which was a major stumbling block for cryptocurrency momentum. Negative news on Bitcoin ETF’s can and will move Bitcoin markets (mostly down). The news seems to have had a ripple effect, and now it seems that VanEck is in some ways adding insult to injury by releasing indicators that investors are going elsewhere and moving away from the cryptocurrency space.
Coverage by Ali Raza at Cryptopotato shows VanEck leaders positing that investors are jumping ship from a down crypto market, and moving toward gold and gold ETFs instead.
“According to VanEck Associates CEO, Jan Van Eck, there are signs that the state of the crypto market might be encouraging investors to seek out other commodities,” Raza writes. “Van Eck believes that investors are moving away from Bitcoin in favor of more traditional assets, such as gold … Last week, Van Eck stated that Bitcoin pulled the demand away from gold in late 2017. That year saw an increase of BTC price by more than 20x, as the coin hit the value of nearly $20,000. At the same period, gold’s price increased by only 4%. One year later, however, the Bitcoin’s price dropped by 82%, while gold value continues to rise, this time by 2.5%.”
As evidenced in this current news, you can see that gold often goes up when the stock market goes down. However, in a longer trendline, we can see that gold price per ounce tends to stick around the $1300 mark. That’s been true throughout more than one year, as gold originally ballooned after the financial crisis, and then settled back down to coalesce around that $1300 line. Gold is not at the top of its value peak, but investors may be looking long-term and thinking that as markets become unstable, gold is a very secure option.