Paolo Ardoino, Tether’s CTO, recently discussed the role of Tether Gold ($XAUT), Bitcoin, and gold in the evolving economic landscape. Ardoino emphasized the similar characteristics shared by Bitcoin and gold, namely their limited supply and the complexity of extraction. However, he pointed out gold’s physical limitations, such as weight and the need for secure storage, which inspired Tether’s creation of $XAUT.
He clarified that $XAUT, a digital token backed 100% by physical gold, isn’t competing with Bitcoin but offers an alternative to traditional fiat money. Despite Bitcoin’s unique properties, he acknowledged that its understanding remains a challenge for many. Tether is thus committed to the long-term project of Bitcoin education.
Ardoino portrayed $XAUT as an accessible first step towards moving away from fiat money and into the digital paradigm. He also revealed the growing recognition of $XAUT, with a market cap of ~$500 million, global trading support, and potential adoption by banks as an inflation hedge. He concluded by stating that Tether Gold is effectively resurrecting the gold standard in a digitized form.
The totalcrypto market capadded $168 billion to its value for the last seven-days and now stands at $2,106 billion. The top 10 coins were mostly in green for the same time period with Polkadot (DOT) being the only exception with its 7.1 percent of price decrease. Bitcoin (BTC) is currently trading at $60,739, ether (ETH) is at $2,177.
Bitcoin failed to break it’s all-time high last week and after multiple rejections near the $60,000 area, was pushed back down below the weekly resistance zone. The coin closed the previous seven-day period at $58,220, successfully rebounding from the 21-day EMA on the daily timeframe on Sunday, April 4. The move resulted in a 4.4 percent increase for the week.
The trading day on Monday was quite volatile and we saw the biggest cryptocurrency once again touching the shortest EMA on our chart at $56,800 before forming a solid green candle to $59,140 in the evening.
It is worth noting that the price was fluctuating in the $59,000 – $55,800 range since March 15 with the only exception being the four-day period between 23-27 March.
On Tuesday, April 6 bulls were once again left empty handed, suffering yet another rejection at the $59,000 mark, which triggered a pullback to $57,200 during intraday, and eventually a daily candle close at the weekly open level – $58,100.
The mid-week session on Wednesday was a continuation of the short-term downtrend reversal as BTC continued to slide, reaching the lower boundary of the above-mentioned range. It erased 5.2 percent of its value for the two days of correction.
On Thursday, the BTC/USDT pair started moving up again. It formed a solid green candle to $58,170, adding 4 percent. As mentioned during our previous analysis, re-capturing the 21-day EMA at $56,600 was a prerequisite and a potential trigger point for adding new long positions. Once this was completed, buyers slowly started taking over control.
BTC remained flat on Friday then surpassed the weekly open on Saturday by reaching $61,237 during intraday. Also temporarily breaking above the weekly resistance zone. It ended the day at $59,800.
The Sunday session was no different and bitcoin continued to march North. This time to $59,971 registering a 3 percent increase on a weekly basis.
What we are seeing on Monday morning is increased bull pressure in front of the horizontal line formed around the last highest daily candle close.
The Ethereum Project token ETH hit a new all-time high last week, touching $2,146 on April 2 and managed to keep most of the gains before the weekly candle close on Sunday, which helped it add the stunning 23 percent to its valuation.
On Monday, April 5 and Tuesday, April 6, the ETH/USD pair continued to move North and printed yet another highest point of trading – $2,153. The rally, however, looked exhausted as profit-taking activities started to kick in.
On the third day of the workweek, the ether dropped all the way down to $1,927 in early hours of trading before stabilizing above the previously solid weekly resistance level near $1,943 turning it into support. The uptrend remained intact and even though the coin lost 7 percent, the bullish market structure was not broken.
Just like bitcoin, the ETH/USDT pair rebounded from the support and started making its way back up on Thursday. It grew by 5.8 percent and reached the weekly open at $2,072.
The last day of the workweek came with a consolidation around the mentioned level – preparation for an uptrend continuation, based on the uptrend channels formed on daily/weekly timeframes.
The weekend of April 10-11 started with a fresh all-time high on Saturday. The Ethereum token hit $2,199, right above the upper boundary of the trend corridor.
On Sunday, buyers only managed to ensure a stable closure at $2,153 as the biggest altcoin finished the week 3.7 percent higher.
It is trading slightly higher – at $2,176 on Monday morning, flirting with the diagonal resistance line.
Top 10 Movers
The rise of XRP is once again front-page news. The Ripple company token was the best performing digital asset in the Top 10 list for the past week and it managed to increase by 113 percent for the period.
The coin climbed above $1.00 for the first time since April 2018 hitting the $1.50 mark on Sunday, April 11. What is more, it is now worth five times as much as it was on January 1 this year.
Bulls were successful in breaking out of the $0.65-$0.7 zone, which marked the upper limit of the range, and will be now looking to defend the recent gains, mainly by consolidating in the $1.10 area. This level will act as our next line of support.
Naturally, the next critical level to re-capture will be $1.5 (the coin is currently trading at $1.38). A significant pullback could be expected given the rapid price increase in the last week or so.
Altcoin of the Week
Our Altcoin of the week is Bitcoin Gold (BTG). One of the popular Bitcoin forks added 176 percent to its value for the last seven days and moved above the $100 mark for the first time since February 2018. The coin is 1187 percent up since the beginning of 2021, which makes it one of the best performing “legacy” projects in the Top 100 list.
The most probable reason for the surge is the revived interest towards legacy cryptocurrency projects like XRP, LTC and BCH. Additionally, Bitcoin Gold announced a partnership with Phala Network to “develop and deploy a lightweight, secure bridge between BTG and the Polkadot ecosystem using Phala’s private and secure TEEs.”
The BTG token peaked at 0.00203 (around $116.8) against BTC on Sunday, April 11. It reached #66 on the CoinGecko’s Top 100 list with a total market cap of approximately $1.9 billion.
As of the time of writing this market update, BTG is trading at 0.00176 against BTC on Binance:
A long-forgotten Bitcoin (BTC) hard fork has surged almost 200% in a week — simply because traders are buying the wrong altcoin.
Bitcoin Gold (BTG), a relic from the 2017 forking season, traded at $113 on April 9 — the highest price since February 2018 — after 30% daily gains as trading volumes topped $250 million.
Bitcoin Gold piggybacks to 173% weekly gains
A curious contrast to an otherwise lackluster cryptocurrency market, Bitcoin Gold’s success appears to be not wholly genuine — but also not the fault of its holders or developers.
As Cointelegraph reported on Tuesday, a new Bitcoin fund from Brazillian investment bank BTG Pactual moved a step closer to launching this week after teaming up with the Winklevoss twins’ Gemini exchange for custody management.
While having nothing to do with Bitcoin Gold, the biggest Brazilian investment bank does share the altcoin’s ticker — and the coincidence was good enough for hungry buyers.
After the Gemini news broke, Bitcoin Gold saw a flurry of demand which at the time of writing shows no sign of abating. This, reactions argued, showed that the cryptocurrency industry was still very much in its nascent phase.
“We’re so early that people buy Bitcoin Gold BTG, because there is a new fund called BTG Pactual,” podcast host Anita Posch warned Twitter users.
“No, it’s not a cheaper Bitcoin!”
By contrast, Bitcoin Gold announcing an actual partnership in late March did hardly anything for price action.
Nothing to do with Bitcoin
Bitcoin Gold came about as one of the multiple hard forks of Bitcoin in 2017, the year that also spawned Bitcoin Cash (BCH), Bitcoin Diamond (BCD) and others.
Unlike their parent, the forks have achieved only limited success. As Cointelegraph recently reported, despite the broad uptick sweeping through altcoins more broadly, BCH, for example, continues to lose value in BTC terms.
Some of their proponents have adopted an aggressive marketing stance which positions the fork as Bitcoin itself, a misleading move which has likely also contributed to demand.
Cointelegraph reiterates that buying Bitcoin Gold, Bitcoin Cash or any cryptocurrency with a ticker other than BTC means that one holds an altcoin, not Bitcoin itself.
Crypto enthusiasts often talk about bitcoin as a hedge against inflation. Why?
The argument is that central bank money printing will lead to inflation or the decrease in the value of money over time. Bitcoin, by contrast, has a fixed limit of 21 million coins that can ever be created. This limited supply allows bitcoin to resist inflation.
The COVID-19 pandemic presented the ideal conditions to test this theory once countries across the world began injecting trillions of dollars into their economies. Many countries, including the U.S., printed money to meet stimulus requirements for its citizens.
Yesterday, the chairman of the U.S. Federal Reserve, Jerome Powell said the central bank welcomes higher inflation in 2021 as a sign that the economy is picking up again after the pandemic-slump.
Governments hoped an expansionary monetary policy, whereby central banks increased the amount of money available to people, would keep economies moving amid prolonged shutdowns of certain sections of the economy. By June 2020, stimulus action taken by countries had surpassed $10 trillion, according to a McKinsey Global report. U.S. government-spending alone amounted to $6.5 trillion in 2020, up 48% from the previous year.
“There’s a crazy amount of money being printed right now, so the value of money is going down. Assets with limited supply, like bitcoin, real estate or shares/stocks, those price tags are going up,” Oki Matsumoto, CEO of Monex Group told CoinDesk.
It’s true that despite dramatic drops in global economic output and unemployment, market jitters drove asset prices up: the stock market ended the year with record gains. Even bitcoin, considered a fringe asset, had a historic price run, gaining more than 250% by the end of 2020.
These gains were partly influenced by traditional investors who saw bitcoin’s potential to work as a hedge against inflation.
And yet, the kind of inflation investors were expecting isn’t here, at least not yet. In fact, U.S. inflation remained stable through 2020. Some economists don’t believe that inflation in America will be running rampant any time soon. Others think a little post-pandemic inflation might even be a good thing.
What is inflation, anyway?
It depends on whom you ask.
The U.S. Federal Reserve defines inflation as the increase in the price of goods and services over time, but many associate it with a change in the money supply, or the total amount of money in circulation.
“In the bitcoin world, they don’t use the term ‘inflation’ quite the way that economists do, as a general increase in consumer price. Instead, they tend to use it to mean an increase in the money supply,” said economist and CoinDesk columnist Frances Coppola.
The crypto argument – that printing more money leads to inflation – does sound compelling, Michael Ashton, inflation consultant and JPMorgan alum, told CoinDesk. When there is a change in the relative quantity of two goods, the one that is increasing in quantity tends to get cheaper, he said, adding that this happens with foreign exchange all the time.
The reason why the Mexican peso has been cheap relative to the U.S. dollar for a long time is because the supply of Mexican Pesos has consistently outpaced the supply of U.S. dollars, Ashton said. Because here are a lot more pesos than dollars out there, he explained, the value of the peso in exchange markets goes down.
“That’s part of the crypto argument. They say, ‘We’re gonna limit how fast cryptocurrency supply can grow’ and since we are printing all these dollars, then that means that the dollar has to depreciate a lot relative to crypto. Therefore, the price of crypto should rise over time,” Ashton said.
Calvo said the view that you can control the price levels of goods and services through money supply is not limited to the crypto world but shared by investors in general, and for good reason. When you look at many countries over a long period of time, you can see some association between the increase in money supply and inflation, Calvo added.
But Calvo, Coppola and Ashton all agree that increasing the amount of money in the economy – with a stimulus package, for example – does not guarantee a rise in price levels.
“If you increase your money supply, you may or may not get an increase in the consumer price level depending on what else is going on in the economy at the time. So there are a number of other factors to consider,” Coppola said.
Money is printing, is inflation soaring?
Not really, at least in the U.S.
The U.S. Federal Reserve has an inflation target of 2% measured using the consumer price index (CPI). In 2020, despite inflationary fears due to pandemic-related spending, the U.S. inflation rate hovered around 1.5%, well below target.
One explanation for the relative stability of U.S. inflation is money velocity, which quantifies how fast money changes hands in an economy. If the money supply is increased, but people don’t spend a lot of money quickly, inflation can remain in balance.
After the pandemic hit, consumer spending suffered around the world, with countries including the U.S., India, Japan and Germany reporting large drops in household spending. As multiple states in the U.S. went under lockdown, people stayed home instead of dining out, celebrations and gatherings stopped, and travel came to a screeching halt.
People spending less meant the demand for goods and services in general had dropped. Global energy demand declined 6% in the first few months of 2020, its biggest drop since World War II, according to the international energy agency (IEA).
“Weaker demand and significantly lower oil prices are holding down consumer price inflation,” the Federal Reserve wrote in its June 2020 monetary policy report.
The World Bank, in fact, projected a fall in global commodity prices.
It is under these prevailing conditions that the U.S. government was distributing stimulus funds.
“So people are accumulating money, but it is not reflected in the price level,” Calvo said.
Ashton explained this may be because money velocity is very low. People are not getting rid of U.S. dollars fast enough, so the price levels don’t increase dramatically.
“When you drop a ton of money into people’s bank accounts, they can’t spend it instantly. So, mathematically, you have to have a declining money velocity. That’s what happened,” Ashton said.
What about outside the U.S.?
American inflationary fears may be in part due to what’s happening in other parts of the world. Some investors may be looking at countries like Argentina and Venezuela where printing money has led to very high inflation.
“What investors are doing, in general, is looking ahead and saying, we’re seeing a lot of money going into the economy. Therefore, there is a risk that it could happen in the United States; therefore, we need to invest in things that will protect us from that inflation, if it happens. That’s the conventional ‘inflation is coming, we need to protect against it’ argument,” Coppola said.
But in the countries they are looking at, things work differently, Coppola added.
Venezuela and Argentina are hyperinflationary economies where price levels grow rapidly and excessively triggered by an increase in the money supply or a shortage in supply relative to demand.
In Venezuela, for instance, printing money led to jaw dropping increases in food prices last year. The international monetary fund (IMF) reported that the inflation rate in Venezuela was a whopping 6500% in 2020.
In hyperinflationary countries, years of political and economic instability have exhausted the option of printing money without leading to uncontrollable inflation, Calvo said. Coppola added that countries struggling with hyperinflation have other contributing issues like high foreign exchange debt, war, occupation or something political.
Argentina, for example, has had a long and complicated economic crisis riddled with astronomical debt obligations and political instability that often has citizens scrambling to convert their Argentine pesos into sturdier assets or currencies.
“In Argentina, the minute [the government] starts increasing the money supply, very quickly, you see the consequences in the price level,” Calvo said, adding, “Some countries have the privilege of printing money if necessary. Nothing happens. Argentina doesn’t have that privilege.”
Interestingly, the pandemic has not particularly spurred inflation in Argentina either. By mid-2020, inflation in Argentina had reached a two-year-low, according to a Focus Economics report.
Because Argentines were also under lockdown during the pandemic, the slowed economy and low demand combined with increases in government spending hasn’t caused a major rise in price levels, Calvo said.
If inflation isn’t soaring, why are people hedging against it?
People may be buying bitcoin as a hedge against future inflation, and they’re not crazy to do so.
According to a statement made to the media by Federal Reserve Vice Chair Richard Carida, the Federal Reserve will continue to maintain near zero interest rates until inflation rises enough to meet its 2% target.
U.S. policy makers know exactly what they’re doing, said Phillip Gillespie, chief executive officer of crypto liquidity provider B2C2 Japan.
“They are basically going to suppress the interest rates and let inflation run higher,” Gillespie told CoinDesk.
But economists are saying that as the country reopens and spending picks up, reining in price levels to maintain the inflation target will be one of the biggest challenges in the Federal Reserve’s 108-year history.
So naturally, investors are reacting to all the inflation doom and gloom by betting against it, turning an alternative asset like bitcoin into the 2020 breakout star of inflation hedging in the process.
Bitcoin inherited a lot of the same selling points that made gold a preferred inflation hedge like scarcity and portability, according to J.P. Koning, Canadian financial writer and founder of the popular blog Moneyness.
Read More:MicroStrategy CEO Explains Why Bitcoin Is ‘a Million Times Better’ Than ‘Antiquated’ Gold
But when it comes to serving as a hedge against inflation, bitcoin is hardly alone.
“If you look around your house, everything is an inflation hedge,” Koning said. “Your house itself is an inflation hedge, your table, your personal capital, your education are all inflation hedges because all of those things will rise in value as the purchasing power of the currency falls.”