What BTC price plummeted?Bitcoin outperforms stocks and gold for the third consecutive year

Bitcoin (Bitcoin) May have fallen by more than 30% from the historical high of $69,000, but it has become one of the best performing financial assets in 2021. BTC has surpassed the U.S. benchmark index, S&P 500 index and gold.

Arcane Research Pointed out in its new report Bitcoin’s year-to-date (YTD) performance is close to 73%. In contrast, the S&P 500 index soared 28%, while gold fell 7% during the same period, marking the third consecutive year that Bitcoin outperformed the market.

The core of Bitcoin’s extremely bullish performance is Higher inflation. US Consumer Price Index (CPI) The biggest increase in 12 months In the four decades of this November.

The Arcane report wrote: “As evidenced by consumer inflation expectations in the next year, most economists have not seen high inflation coming,” adding:

Bitcoin has risen by 73% in 2021, a period of high inflation, and has proven itself to be an excellent inflation hedging tool.

Bitcoin holdings in institutional investment vehicles have grown

Loose monetary policy and continued concerns about rising inflation have also prompted mainstream financial institutions to launch Crypto investment tools Serve their rich clients in 2021.

Arcane reports that Bitcoin exchange-traded funds (ETF) and physical-backed exchange-traded products (ETP) based on spot and futures inflows 140,000 BTC (approximately US$6.56 billion) this year.

This has prompted more Bitcoin units to be absorbed into investment vehicles, highlighting the greater institutional demand for cryptocurrencies.

In contrast, according to data from the World Gold Council, gold-backed ETFs outflowed US$8.8 billion in 2021. Report Published in December this year.

The volatility behind outstanding performance?

Nevertheless, Bitcoin’s relatively superior performance in 2021 also includes periods of high volatility.

Many analysts believe that extreme price fluctuations prevent Bitcoin from becoming an ideal inflation hedge. Among them is Leonard Kostovetsky, a professor of finance at Boston College. Recalled in his blog post 13 days in 2021 BTC price rises by more than 10% In one direction. extract:

“It seems weird to think that someone who is worried about holding U.S. dollars because they lost 7% of their value last year will be comfortable holding Bitcoin. This may (and often does) lose so much value in a single day.”

Arcane also recognizes the existence of Bitcoin More volatile than the S&P 500 index In 2021, noting that cryptocurrency “behaves like a risky asset” only magnifies the most important stock market trend.

Researchers cited Sentimentality ——Measure the volatility expectations based on S&P 500 index options——to illustrate the relationship between Bitcoin and the stock market.It pointed out that whenever the VIX reading has recently spiked, the BTC price will drop sharply, emphasizing Institutional traders see Bitcoin as a risky asset.

As a result, Bitcoin’s Possibility of falling more severely It also became higher after the stock market correction. Arcane also pointed out that a bearish S&P 500 index in 2022 may eventually wipe out most of Bitcoin’s gains.

“Therefore, please pay attention to next year’s stock market headwinds and their possible impact on Bitcoin’s short-term price trajectory,” it added.

related: Arcane Research released its cryptocurrency forecast for 2022

But hedge fund manager Chris Brown is predicting a comprehensive Bitcoin doom in 2022The management members of Aristides Capital said that with the arrival of the Federal Reserve, cryptocurrencies may face a large-scale sell-off End of the $120 billion monthly asset purchase plan Next are three interest rate hikes next year.

Brown said: “If the Fed really raises interest rates enough to greatly reduce monetary easing, or if the market believes they will do so, you will see speculation in certain areas suddenly stop,” Brown said, adding:

The main example of this kind of asset speculation is cryptocurrency; there is $2.64 trillion in “wealth” here, without any support, and no cash flow is generated.

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