Jewelers love gold – they should also be into bitcoin
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Ratner: "I made a bet, and guess what? Here's the thing: I hit."
Howard Ratner was a real-life New York City jeweler subsequently played by Adam Sandler in the recent movie "Uncut Gems." The story of his life is played out on film after his untimely demise, but if Howie were around today, he'd probably love bitcoin.
As you can imagine, jewelers are obsessed with precious metals. It's cold, it's physical and it is worth cash money no matter the market. I remember doing technology consulting for a jeweler around the time of the 2008 crisis, and there were rings and earrings casually laying around me with BMW-level price tags – hard assets that could be sold anytime.
So how did the subject of Mr. Ratner come up while working on this letter? I asked CoinDesk Research to look into the performance of gold versus bitcoin recently, and Howie came up during the conversation.
First, here's gold's daily returns, charted as a percentage of gains or losses the past month:
Here's bitcoin's daily returns, charted as a percentage of gains or losses the past month:
Wow, it seems gold has done better, right? Well, let's compare both over the past month:
The two charts with bitcoin and gold alone have different percentage changes because bitcoin is way more volatile. But when you look at the comparison chart, it's clear bitcoin is responding to the crisis in a similar way to gold overall. As Howie might say, if you make the right bet on it, you might hit.
Here's something else to consider, and I've been harping on this during my second tenure here at CoinDesk. Most cryptocurrency advocates, especially those who have been around since the early days, are actually gold bugs.
Gold lover Peter Schiff might disagree, and his recent tweet mentioned later in this newsletter tries to suggest that, but the founding principles of crypto actually come from a fascination with gold.
Litecoin founder Charlie Lee used to talk a lot about his cryptocurrency being the "silver to bitcoin's gold". Meme-frenzy crypto asset dogecoin, co-founded by Jackson Palmer, also used to talk a lot about his interest in bitcoin as "digital gold."
Indeed, as an avid reader of books on the cryptocurreny topic, I've always found Nathanial Popper's book seminal tome "Digital Gold" one the the best crypto books written, fueled by his sources on the subject as a writer for the New York Times.
"Digital Gold," also known as bitcoin, may be volatile at times, but it also never sleeps. Here's an example of what someone with with bitcoin could buy gold for in the last month, weekends included:
Bitcoin and other cryptocurrencies are somewhat on an island compared to other assets, gold included, because crypto trading never ever stops.
But again, going back to my own halcyon time working with a jewelry business, proprietors in that specialized industry have a particular obsession about what they do. So it wouldn't surprise me to hear about a cryptocurrency advocate saying something a jeweler would about bitcoin, Howie-like:
Ratner: "I made a crazy risk, a gamble, and it’s about to pay off."
– Daniel Cawrey, Markets Editor
Stocks, Bitcoin Rally on Prospects for US Senate Stimulus Bill
The S&P 500 index rallied 9 percent Tuesday. It was a respite from Monday when the U.S. markets wiped away all gains since 2016. The Federal Reserve had announced an easy money policy of using lower rates and quantitative easing (QE) to boost the coronavirus-plagued economy, but wasn’t able to staunch the bleeding. That changed quickly the next day. Bitcoin did well, but not as well as equities.
Silvergate Resolves Wire Issue Keeping Transactions in Limbo
Early Friday, the crypto-friendly bank was unable to process wire transfers because of an outage at bank payments processor Finastra. Silvergate, like many banks, uses Finastra’s cloud datacenters as opposed to hosting centers on the bank’s premises. When Finastra detected anomalies in its systems as a potential cyberattack, the service provider shut down for a while, cutting off wire transfers.
Bitcoin Marches on as Markets Cheer Fed’s QE ‘Bazooka’
There's a general consensus in the analyst community that unconventional policies adopted by the Fed could bode well for bitcoin.“We foresee increasing capital deployment into bitcoin as a result of a ‘lack of confidence’ across central banks and governments during this volatile period,” said Lennard Neo, head of research at Stack, a provider of cryptocurrency trackers and index funds.
CFTC Defines What ‘Actual Delivery’ of Crypto Should Look Like
The CFTC states that in its view, "actual delivery" occurs when a customer has complete control over the asset and the offeror no longer has any control over the asset by the end of 28 days after the transaction. The publication comes following several years of public input from exchanges and other stakeholders. The regulator approved the draft on March 23.
BitMEX Open Interest Collapses After Long Squeeze Traders have scaled back their open interest positions in bitcoin perpetual contracts listed on the crypto derivatives exchange BitMEX. “Open interest is falling because the market is full of uncertainty,” Ben Zhou, CEO of Bybit, told CoinDesk. “Traders in all fields, whether traditional or crypto, are simply unsure of where the market is going."
Bybit Enables Two-Way Margin Trading
The USDT perpetual contracts, going live Wednesday, attempt to replicate the underlying spot markets using increased leverage. Similar to Bybit’s existing perpetual contracts denominated in bitcoin, the contracts will have no expiry date, and the price will be attached to the underlying index. This enables traders to hold both long and short positions at the same time and with different levels of leverage.
LISTEN: Boosted
Hosts Adam B. Levine and John Biggs talk about the boost in overall markets, what extraordinary policymaking could mean for bitcoin and the discussion of a digital dollar in digital wallets amid coronavirus.
Tweet of the Day
Notorious gold bug Peter Schiff is calling out "bitcoin bugs". Can't say I've ever heard that term from anyone other than Schiff. Gold has its place; people like it in tough times. In addition, many cryptocurrency advocates believe in gold as an investment – it's often cited as one of the reasons many put money into bitcoin. But Schiff's tweet seems aimed more at sparking controversy than serious commentary.
Trend: Bitcoin has bounced from Asian session lows near $6,500 on news that the U.S. has agreed a multi-trillion-dollar economic stimulus package.
Senators and Trump administration officials reached an agreement on a massive economic stimulus bill to alleviate the economic effects of the coronavirus pandemic, Reuters reported earlier. The package is expected to be worth $2 trillion and is expected to see a vote in the Senate later on Wednesday.
At press time, futures on the S&P 500 are up nearly 0.8 percent and Euro Stoxx 50 futures have risen nearly 3 percent. With equity markets pointing to risk reset, bitcoin could continue gaining altitude during the day ahead.The leading cryptocurrency has closely tracked action in risk assets over the last four weeks.
Bitcoin's technical charts, too, are reporting bullish conditions. The cryptocurrency jumped 4 percent on Tuesday, reinforcing the upside bias signaled by Monday's bullish engulfing candle. The 5- and 10- day averages are trending north, indicating a short-term bullish setup.
The cryptocurrency looks on track for a climb to $7,000. The bullish case would weaken if the symmetrical triangle pattern seen on the hourly chart is breached to the downside.
Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments.
Why Argue About Bitcoin Versus Gold?