Anthony Pompliano has returned to comment on the price of bitcoin.
In particular, he replied to those who accuse bitcoin of not being a good investment because its price is falling lately.
In a first post, he blames Peter Schiff, known bitcoin critic and supporter of gold, who claims that BTC is not an uncorrelated asset, but instead is correlated to risky assets such as stocks and inversely correlated to safe assets such as gold.
Schiff explicitly argues that when the price of risk assets decreases, so does the price of bitcoin, and when the price of risk assets increases, the price of bitcoin increases less.
This is how Pompliano responds:
“Imagine Bitcoin outperforming gold by 20% this year during all this madness in the markets and still claiming that the shiny dinosaur rocks are the best chaos hedge”.
In another tweet he writes:
“The S&P 500 is down more than 10% in 2020. Bitcoin is up more than 10% in 2020. Bet your financial advisor is still telling you how safe equities are and how risky Bitcoin is though. Show them the data and ask why you shouldn’t fire them!”
In fact, comparing the price trends of the last few months, it doesn’t seem that the trend of bitcoin is following that of gold or stocks.
For example, from August to December 2019 the price of BTC fell, while the price of gold remained substantially unchanged.
In the first month and a half of 2020 both prices increased, with BTC gaining much more than gold in percentage, but since mid-February BTC’s price has fallen, while the average gold price has continued to rise, albeit slightly.
Comparing BTC’s price trend with that of the S&P 500 index over the same period, the index of the 500 most capitalized US companies rose more or less steadily from August 2019 until mid-February 2020 and then literally plummeted to a value equal to that of June 2019.
Over the same period, BTC‘s price first fell significantly, then rose sharply and then fell again.
In other words, it seems that it takes a strong sense of imagination to see some kind of correlation between these very different movements.
Sure, when isolating a short period of time, it is possible that there are similar movements, but this could also be due to chance, or to the fact that some specific events are able to affect prices of non-correlated assets. But to argue that bitcoin is correlated with the stock market, and inversely correlated with gold, seems more an effort of fantasy than a rational analysis of reality.