I personally find it very intriguing to follow not only the intraday moves in top-tier cryptocurrencies like Bitcoin (BTC 2.12%), but how such tokens perform over longer near- and medium-term spans.
CRYPTO: BTC
Key Data Points
Since 4 p.m. ET on Friday, Bitcoin has surged 4.3% higher on the back of what I think are three very important catalysts for investors to watch right now.
Aside from the macro noise underpinning broad-based market moves, which also affect Bitcoin, this is a unique digital asset with plenty of its own independent catalysts worth considering.
Let's dive into a few of those key metrics investors are watching, as well as the investment case around why Bitcoin still makes sense as a core holding for any portfolio right now.
More than just a currency or market hedge
Image source: Getty Images.
Undoubtedly, the first big macro catalyst that's driving interest once again in Bitcoin surrounds the performance of the U.S. dollar relative to a basket of global securities. The thinking is that if the U.S. dollar continues to decline in value relative to its global peers, the value of Bitcoin relative to the dollar should increase over time. That thesis has played out to a certain degree of late, given the weakness in the dollar we've seen, and it's a key catalyst investors are watching.
That said, there are competing factors at play driving the U.S. dollar higher and lower on an intraday basis. Hopes that China/U.S. talks will pick up could strengthen the dollar, but bets are that a weakening dollar tied to interest rate cuts courtesy of the Federal Reserve have overshadowed these positive catalysts. So, for now, Bitcoin remains the place for investors who are concerned about dollar weakness to park cash.
However, news around a group of developers on Bitcoin's blockchain who call themselves "Core" announcing plans to tweak Bitcoin's underlying software to increase the amount of information that can be held on a given block have re-infused a narrative around real-world use cases coming down the pike that could drive increased adoption. That's a second catalyst I'm paying close attention to, and think investors should as well.
But perhaps the third and bigger catalyst right now surrounds the so-called Bitcoin-to-gold ratio, in which investors measure the value of Bitcoin relative to other key safe haven assets like gold. With the recent decline in the price of gold, one might think this ratio would be historically depressed. It's lower than it was a week ago, for sure. But if this metric converges over time, the store of value argument may become more pertinent for investors looking for safe havens within their portfolios.
