It is still unclear how this tightening regime will affect different asset classes. One notable investor does see upside in Bitcoin between now, and the May meeting of the Federal Open Market Committee (FOMC), which is scheduled for May. This could be good news for assets such as the Grayscale Bitcoin Trust.
Jeffrey Gundlach is the CEO of DoubleLine Capital. He spoke Wednesday on CNBC’s Closing bell overtime.
According to the bond expert, bitcoin’s price has fluctuated between $40,000 and $60,000 over the past few months. Over that period, gold’s ceiling and floor were $1750 and $2,000, respectively.
“Bitcoin trades at the lowest end its range, $41,230 as of Wednesday,” Yun Li reported for CNBC.
It will be interesting for the Fed to see if bitcoin rallies during their next meeting. Critics often refer to bitcoin as “digital gold”. But bitcoin bulls do not expect to see the asset, or GBTC, perform as well after a rate increase. It has a long history of languishing under rising interest rates.
It’s easy to see why. It is easy to see why. Gold and gold funds don’t pay dividends or interest.
Bitcoin traded at $41,000 after Wednesday’s Fed News and has fallen just 2% in the last week.
Gundlach said that stocks are seeing a relief rally after the Fed’s move. This is partly due to equities being in an extremely oversold position. CNBC reports that an investor suggested that the market could roll over if the Fed raised interest rates a little more.
This could increase bitcoin’s appeal and make gold more appealing.