Cryptocurrencies Trading Strategy and PAX gold (PAXG), a token whose value is tied to the price of gold and is backed by physical gold, have hit a record low of -0.41. It has never been this low before. PAX gold is a token that has real gold backing it up. The 60-day correlation between bitcoin and PAXG hit a new record low of -0.5 at the beginning of this month.
There will only ever be 21 million bitcoins, and the rate at which they are made slows down every four years. People who like bitcoin have said for a long time that it is a good way to protect against inflation. Even though inflation is at its highest level in 40 years this year, bitcoin is not living up to its reputation as “digital gold.”
The value of the cryptocurrency has gone down by 12% this year, while PAXG and gold have gone up by more than 4%. People have long thought gold is the best way to protect against price increases. At first, we thought the precious metal had passed the test of the economic collapse because its price went up while the dollar price went down.
Things worldwide in 2022 show that gold isn’t always the best way to protect against inflation. At the moment, Russia and Ukraine are at war, inflation in the US is at its highest level in forty years, and more and more people are worried that the economy will soon get worse.
Even with all of this, the price of gold has gone down by 7.07 per cent in the last six months.
Half of the gold that is bought is used to make jewellery.Gold is worth about 11 trillion dollars on the market right now. But more than half of the demand goes to jewellery, 25% to investments, and 11.3% is held by central banks.
Since 1971, when the U.S. stopped using the gold standard, there has been a big difference between how much gold is worth and how much stocks and other forms of equity are worth.
In January 1980, gold was worth $2.5 trillion on the market, and stocks were worth $2.5 trillion. In 2022, the stock market was worth more than $115 trillion, while gold was worth about $12 trillion. There is a big difference in how much shares are worth because of fiat currencies.
Do central banks want the price of gold to change?
Since central banks own most of the valuable metal, the price drop shows that prices are changing. Most of the time, commercial banks can borrow paper certificates backed by gold from central banks.These banks buy bonds and other assets with the money from the certificates. They then sell the bonds and other assets for a profit to pay for more certificates.
One way the central bank keeps the price of gold low is by doing this. This is done because if the price of gold went up a lot, people would sell their dollars and buy gold instead. Looking for a safe BTC trading platform? Then check out Bitcoin smart.
The price of gold went up and down because of a smart hummingbird
Bitcoin is the solution to every problem. Bitcoin (BTC) is still the best way to protect yourself from inflation. This is because the price of gold can change, and paper money is not a good way to keep your money safe.
Even though Bitcoin’s price changes a lot, it has all the features that make it the best long-term way to protect against inflation. Because it is anonymous and doesn’t have a single point of control, it can’t be manipulated.
Because there aren’t many of them and they can’t be copied, their value can last and keep going up.In the last five years, Bitcoin’s value has increased by 407%, which is more than gold’s growth of 35% over the same period. The US dollar gained 15% of its value against other currencies between then and now. But inflation has made it harder to buy things with a dollar.