Bitcoin to Gold correlations had been trading at 0.496, but in the past 3 months, the correlation has jumped to 0.827. Both arguably have been traded as a “safe” haven” to park cash while riding out the highly volatile equities market.
Bitcoin bull, Brian Kelly, was on CNBC earlier today to discuss his view on the recent Bitcoin trade action.
Check out clip from CNBC below, we’re also including the transcript in case you can’t see the video. All rights belong to CNBC and please refer all credits to CNBC.
dig for gold and Bitcoin gold, touching its highest level in six years, and Bitcoin up twenty five percent over the past week. Joining us now to discuss why some investors are turning these assets as safe haven. Treating them as a safe haven is Brian Kelly, founder B K C M Digital Assets and a CNBC contributor.
Yeah, of course. Of course.
You can see a little assets.
somewhat biassed. Never ask a barber if you need a haircut. I,
I ask this of our Anthony Pump Liano yesterday, and that is whenever you see, for instance, a drone strike in the Middle East, oil prices go up and there is a premium to that price. Are we seeing that? Are we seeing a Bitcoin premium in the price right now because of what is going on in Hong Kong, plus devaluation.
So yeah, Tionne extent, we are. So for the first time, I’ve been on this network since twenty thirteen talking about Bitcoin, and every time somebody has asked me whether or not Bitcoin is being traded like a macro kind of asset, I’ve said no until this year. What we’re seeing this year is macro funds traditional investors are trading Bitcoin as an alternative or a supplement to gold and using it as this kind of macro hedge.
The correlation between Bitcoin and gold also is sort of undeniable. This is a step that I pulled out yesterday on the Bitcoin. Gold correlation of the past year has been point four nine six in the past three months, though it’s gone up two point eight two seven, implying ah, much tighter correlation between the two. But you still say it’s it’s too far to say that Bitcoin is a safe haven.
Well, so I use the word safe haven with an asset that is five times as volatile as the S and P five hundred. But people are to the extent that you’re using as digital gold, people are thinking of it as that kind of safe haven.
So, Brian, here’s my question. All of this been happened with the backdrop of China, and there is this sort of assumption at the moment that a lot of this is money that’s flowing out of China into Bitcoin. Is it really money flowing out of China? Which, by the way, is hard to do. That’s not thievery in the world? Or is it just the assumption of investors in developed countries saying themselves? You know what money should be flowing out of China or this represents what this could look like in the future when money could flow out of China. Therefore, I’m gonna push the price up, and that’s what’s really happening.
I think that’s more than what’s happening, what we’re seeing. We’re seeing a lot of activity from Asia, but not necessarily in Bitcoin in some of the other stable coins, something like a tether. So you’re seeing that. But you’re right. It’s very difficult to get money out of China. I think it’s more flight situation. It is. It’s not a capital of speculation about capital flight, right? So the question is, do we have coming?
out in the moment? But like in the future,
well, there are There is some I mean, look at Hong Kong. You can certainly get money out of Hong Kong and get into Bitcoin relatively easily, so there is some capital flight coming into Bitcoin.
I think that’s an interesting point you raise in terms of the activity in Asia. Asia has always been a hotbed for Bitcoin.
crypto currencies in general. But now, with the threat that China’s potentially devaluing the yuan, you’ve got yuan bloc countries that are afraid that their currencies will also go down in tandem. And so if you’re in Japan or South Korea, for instance, right, right, Already a hotbed for Bitcoin, you might see a little more activity. Have we seen that in the volumes?
So So We have seen a lot more activity coming from South Korea that South Korea, for a while, had actually banned Bitcoin and had closed down trading. But that’s opened up again. So South Korea, Vietnam, most of Southeast Asia. That’s where you’re really seeing the kind of capital flight coming from. And it’s still, you know, I mean Asia. Between Japan and Southeast Asia. You’re talking more than fifty sixty percent of the daily trading volume comes from there’s. There’s two.
schools of thought on whether or not Bitcoin could be a long term safe haven. One as it could be, just like gold, not much utility, and it could just build confidence. The other is we need to see more utility needs to be more than buying fake ID’s drugs and illicit sex which can’t,
never done that with Bitcoin, but other?
Which camp do you?
So you know what? I look it as a life cycle analysis, right? So, you know, in twenty two thousand nine, Bitcoin was a start up and it’s kind of gone through this phase where we are now commodity much more like gold. Eventually, I think we’ll get to the currency stage and that’s what will be used much more of a medium exchange. I do think it can still survive as digital gold. I mean, it’s a two hundred billion dollar market cap today. Gold is a ten trillion dollar market cap, right? So even if it took ten percent, you’re talking about a Viper five X from here.
So I think we will get there. It’s just a lifestyle life cycle.
Two questions. You’re the You’re the central banker for Bitcoin.
Do you like the activity where it is now? You wish it was worth less or more. Okay, because of the need for it to become prevalent on. And then the second question is your the central banker for the United States. What do you do to kill Bitcoins?
So I’ll take the first. The first question. You know, I don’t actually thie. Interesting thing about Bitcoin is,
the value is whatever the market puts on it, right, it’s almost like working capital. How much working capital do you need to run the underlying business of the underlying economy? Right now, the market’s telling us you need two hundred billion dollars worth of working capital. I would argue that as it grows, we’re probably talking about a couple trillion dollars worth of working capital, so I think we have much higher to go in the very short term. Sure we could. We could drop to six.
in terms of in terms of killing. And it’s very difficult, very much like the Internet. But the kind of choke points and at least where the A. M L k Y c r the Fiat Omran. So when you put it, you?
know your customer?
Yeah, anti money along no customers. So where people are taking their U. S. Dollars or their Japanese yen or there there are in beer, Hongkong dollars and putting it into Bitcoin those of the points where governments have come in and said, Listen, if we are going to support it. We want to make sure that it’s not being used for all the illicit things that you mentioned, and if we’re not going to support it, will just choke it off that.