As the Bitcoin rally slows down, investor attention is turning again to the US stock market, buoyed by a series of political and economic developments.
After a bullish recovery from a fall of more than $1,200 in late July, Bitcoin plateaued in August. The cryptocurrency failed to break the psychological barrier of $12,000 during the month, mostly remaining in a relatively stable band between $11,200 and $11,700.
Taking into account today’s last-minute numbers, Bitcoin’s dollar value appreciated by about 3% in August. It ended July at above $11,300 and currently sits just shy of $11,700. However, these numbers don't compare to the performance of US stocks, which have managed to outperform hedge assets such as Bitcoin in terms of profitability.
The S&P 500 was up 7% in August, capping a gain of 35% over the last five months.
The market’s growth over the past few months has been surprising, considering that the world is still mired in the same coronavirus crisis that caused the markets to fall in March 2020. There is no cure for COVID-19, many industries cannot return to work as normal, and trading is still restricted.
Try telling that to the stock market.
The stock market has managed to fully recover from the fall, perhaps due to the US government's efforts to save the markets through the massive printing of money, which has allowed some companies to remain solvent.
Following the printing of $586 billion in March, the Federal Reserve doubled down last week by stating that it would allow inflation over its previous target of 2%.
“Stocks are overvalued by every traditional metric, and the money on the sidelines will look for worthy investment venues,” Cornell University Professor Emin Gün Sirer told Decrypt.
That was back in June. It’s now coming to the end of August and stocks have only gone higher.
But suppose that stocks truly are overvalued. In that case, Bitcoin could prove to be a better store of value.
The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.