Topic: Price of Bitcoin, gold and the unemployment rates in the USA. (Read 374 times)

Let's see the mere fact how Bitcoin beats gold in price performance since late of 2020 till early of 2021.

• The unemployment rate in the USA. is stagnant in last 3 months (November 2020 to January 2021) with the correspondent rates for Nov, Dec. and Jan. are 6.7%, 6.9% and 6.7%.
• Gold has a stagnant movements in the past 3 moths as well and it currently is trying to break out again.
• Bitcoin, in the same period, is outperform and after broke its 2017 all time high, it continuously sets up a few new all time highs.

Additionally, below is the table for % of profit you can earn with Bitcoin or Gold since 1 Nov 2020 to 9 Jan 2020 shows the mere and impressive fact of out-performance from bitcoin.

• BTC (monthly min) is the minimum of daily close price of BTC each month.
• GOLD (monthly min) is the minimum of daily close price of GOLD each month.
• BTC (9 Jan 2021) is the price of BTC as of writing
• GOLD (9 Jan 2021) is the price of Gold as of writing
• % of profit for BTC investment in monthly min is 116.8% and with today price is 195.9%.
• % of profit for Gold investment in monthly min is 7.1% and with today price is 18.9%.
• I used min value for monthly price here with an assumption to buy at lowest price and falls into panic sell, shake hands at lowest price next months. Even weakly shakes hands, profits are still unimaginable huge.

A bunch of people, who deal with the cryptocurrencies do not take into account this information, but it should be considered. I think that many people, who lose their jobs not due to pandemic isolation, start working with crypto, and it will affect Bitcoin greatly.

What is taught on universities and broadcasted by governments don't take into account the huge contribution of debt. The whole global economy is grown and milked by debt. The pandemic and huge money printing prove it.

Bitcoin has crashed only for like a week before it recovered. Stock markets and everything else is coming together maybe a bit, not even fully corrected, whereas bitcoin is double of what we were at the start of the year. How many stocks, or gold prices or anything else moved  DOUBLE PROFIT in this year?

While everything else was down, bitcoin was down too and I agree with that, but the price started at $7k and we peaked at around $14k right now, so the fall could happen and I understand it but recovering is not even a question for bitcoin, while everything else is trying to recover bitcoin is way beyond that and doubling your profit year to date. This is why the traditional markets are wrong and this is why classic financial theory is wrong, because bitcoin is above all of them.

In a potential financial crisis or recession, investors usually flock away from risk assets and towards safe havens like liquid treasuries or fixed income bonds. And that's exactly what happened in March: stocks, BTC, and gold all fell together, with BTC crashing much harder than either stocks or gold.

The potential financial crisis was averted, the recession looks like it may be short-lived, and with the Fed pumping so many trillions into the market, all three asset classes recovered. What classic financial theory does that prove wrong?

Risky assets are favorite assets when the world has uncertain conditions: potential financial crisis, world or region (war) conflicts. This year breaks such offensive accusations on bitcoin or crypto that they are volatile, risky, blah blah. People who are bitcoin-haters always try to say stocks, gold, etc. are better than bitcoin and crypto. In reality, the weak-down in March and the rallying wave later shows that their words are wrong (they never admitted that stocks or gold are volatile). The classic financial theory was proven as wrong too.
 
It is the point that I implied when create this topic. People are trapped by news that released when things are done. Price was crashed and hours or 1-2 days later they see some news to share with them reasons of such crashed. The unemployment rate (in the USA.) is released on first Friday of each month so let's assume they are 1-month-lagged statistics. If bad things come in early of October, you will get unemployment rate in first Friday of November and thought it is due to to bad things in early of October. It can be right or wrong, depends upon cases.

Regarding to bitcoin, its supply curve, halvings, lost bitcoin, better future adoption and fiat money printing (with paper) / minting (with digitalized fiat) are decisive factors convince me. I believe in bitcoin because all of those.

BTC and gold have a strong positive correlation, which isn't surprising since they're both risk assets, and since all the money printing is pumping risk assets to the moon.

There are periods of both positive and negative correlation between BTC/gold and the unemployment rate. In this case, I think that's because there is no causal relationship between the two. The unemployment rate shot up because of the lockdowns and fear of economic contraction, then dropped as the economy reopened and confidence returned. Risk assets on the other hand are pumping because of Fed and government manipulation and money printing, and because of technical breakouts (stocks above their ATHs and BTC above $10.5K long term resistance).

I don’t know about the impacts if unemployment on crypto, but Bitcoin has been high, it sits at $13,000 and if unemployment is going up, it’s not reflecting on Bitcoin, because if it was then the price would be below what we have now, it would have even dropped from that $12,000.

But, instead it has slowly moved up to $13k just as it did from $11k to $12k. I know for sure that the pandemic resulted to so much increase in unemployment rate, but with time I believe that things will get back to normal. It is just with time and companies are going to sit back up to their main position and able to hire back employees.

Bitcoin and gold are what we can't predict, some things happen and we see them going up, and in the other way they can be going down. They are always difficult to predict, especially Bitcoin.

Some people believe that Bitcoin is the same with most other assets because they were expecting the price to increase during the start of the pandemic, but instead the price took a turn and plunged with other assets, and at a time they thought there was going to be more decrease, the market started to recover immediately. This cryptocurrency market is 100% unpredictable. And that's the same with how gold moves, it goes any direction depending on so many things.

Unemployment rates in comparison with the Bitcoin and gold market is somewhat susceptible, firstly we are still in a Fundamental called Covid-19 and when we start to analyze the Bitcoin and Gold markets, when a short-term comparison is established it is currency a correlation between gold and bitcoin, sometimes many bet on the correlation of both.

I think that the markets faster to react to the crisis that it caused and that continues to make people talk like Covid-19 was the gold market and then the bitcoin market, since they were the fastest markets to recover.

"All models are wrong" according to George Box.

There are many contributors (variables) to a model. You have to make decisions to keep this variable while exclude another variable. No matter the final models you like the most are, all of them are wrong at somewhat levels and at some points of time. Model A can be right today but it will be wrong later. The unbelievable weak down in March of 2020 is a lively example for this. There is no model can control all those things.

The amazing thing is if you can build a good model from which you can get some points to use. It is not perfect but you can use with your awareness of uncertainty. Models are built from past conditions, data and with the assumption that future conditions won't change much. In reality, life is different and it happens in uncontrollable way.

[1] https://en.wikipedia.org/wiki/All_models_are_wrong

People have to realize that things that affect gold, unemployment rate and crypto could all be the same thing, it is not them affecting each other, it is something affecting them all. For example this pandemic is a great example for this situation, some bat caused some trouble and now there are more than a million people dead, honestly it is even decent that we had "only" 1 million because if we didn't cared at all we would had lot more but we did just fine, not good obviously but fine.

That caused the whole world to be horrible for a while, tons of unemployed people because jobs were closed, tons of scarcity and need for money that caused people to sell their golds and so forth, and tons of chaos in crypto world as well. It wasn't because one thing went down that caused others went down, they were all equally and at the same time going down.

Plus the pandemic might jot be over too. Reading about the Spanish Flu Pandemic of 1918 to 1920, it had four waves, and it had infected 500 million people around the world, killing possibly up to 100 million people.

Invest accordingly.

"Never be correct", even if both assets were literally moving together for months? While they've moved the opposite ways recently, it still doesn't change the fact that they were somewhat correlated. This isn't even an opinion. It's just data.

The pandemic of covid-19 is a big challenge to all the world around. That is the problem as jobs have been lost in all country including the US economy. The indices from the US is not showing a very good signal and you understand if the US economy is a big economy that what happens there can affect many economy.

The impact of the pandemic = shrinking economy = higher employment rates = more shrinking economy.

The impact causes the smart instutional investors to = store their wealth in safe havens like Gold and Bitcoin, buy bonds, below market price real estate, and other safe investments.

All of such plots, correlations are for reference and for what happened, for the past. Forecasts are made by using past data and never be correct but among many useless or incorrect models, there are some good models that we can use.

Delayed or lag effects here are from many factors:
- Delay of news released why we all knew the pandemic is there. WHO delayed to make a public announcement that it is a pandemic.
- Delay of data collection on unemployment rates till the monthly reports. Monthly reports are released on the first Friday of each calendar month.
- Delay of companies to reduce their human resources, etc.
- Delay of news effects on different local markets. Where is the geographical location the news is released initially? And how long till the news show its biggest effects globally?

About Bitcoin and gold, over history and in 2020 only, they are positively correlated with 7 days delay (not instantly or intraday). I can say so (with confirmation from data).  

It is just partially true I think. Because the real momentum behind the iceberg is not from the pandemic, it happened and accumulated months before the pandemic announcement on March.

About people, there are many conservative people that you will almost never be able to convince them about bank system bailouts. They are more than ones you can convince and they are not real fuel for the rise of bitcoin, IMO.

I think that these graphs may well correlate for this reason: It is no secret to anyone that the pandemic in the first place deals a very tangible blow to the US economy. The economy begins to suffer and, accordingly, large masses of people begin to seriously think about what to do with their savings so that they are not subject to inflation, and naturally some of these people turn their eyes towards bitcoin and cryptocurrencies. And thus, it can have a rather tangible effect on the price of bitcoin.

Checking your data, I see that upon January 2020, it had a similar shape with BTC and Gold. Highlighted even more on your 2020 graph. They probably have the same shape because the investors of BTC and Gold have their assets withdrew, and the response of people with the pandemic is the same, hence the same shape. Now that the economy is currently recovering, hence people are investing in the assets again.

If you look at it in the microscale, it's hard to determine the effect of unemployment because there's no significant changes with the BTC and Gold prices on the peak of the unemployment rates.

Is it possible to check as well the unemployment of country's that have the major users of crypto? Since the price of BTC is determined globally and not just one place, I think it could add to your analysis of this.

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Those possible lag effects are the decision made by different companies to layoff their employees. It might have been a hard time for them for sure, but that's the reality of what happened during the pandemic.

The effect on asset prices in general is mostly going to depend on the US government's decisions concerning stimulus bills in my opinion(and a bit less depending on unemployment). Since there's a lot of unemployment, it's safe to assume that this is going to mean that consumer spending will go down. With stimulus money distributed, obviously, consumer spending will go up.

As for bitcoin specifically, it's a typical coin flip. If you'd ask me a month ago, I would say that bitcoin would continue to go up with the S&P500(because of government bailouts) but lately both assets have been going on their separate ways so we're back to extremely unpredictable territory. No idea with gold either.

tldr; stocks go up with stimulus, stocks probably go down without stimulus, bitcoin and gold is a coin flip.