University of Sussex; He did a new research to find out why bitcoin and gold prices are not flying.
In the article we shared this morning, we mentioned that Bitcoin and gold prices are on the rise. However, according to the University of Sussex, the increase in the prices of these two products was far below expectations. Because these two products, which are regarded as ‘safe ports’, were expected to gain much more value during the Coronavirus days.
Expectations were High
Bitcoin, which is acting independently from S & P500 and thought to be a ‘safe haven’, was expected to gain much more value while the stock market was falling. However, even though Bitcoin is currently pushing $ 10,000, it could not meet these expectations. As Clem Chambers also pointed out, the correlation between Bitcoin and S & P500 has started to strengthen.
We can say that a similar situation is also valid for gold. Because, even though the price of gold exceeded $ 1760, it could not meet the expectations. After the financial crisis in 2008, the correlation between gold markets and S & P500 weakened, and the gold price started to move independently of share prices. According to the research of the University of Sussex, the correlation between the gold markets and S & P500 after this crisis was minus 40%. But gold and stock markets acted 20% dependent on each other between March and April 2020.
Why doesn’t it rise?
So why is gold now expected to move independently from stock markets when there is a financial crisis? In other words, why do Bitcoin and gold prices increase much smaller than expected?
The CryptoMarketRisk team at the University of Sussex did a retrospective study to find the answer to this question. And the researchers; They realized that the stagnation in the Bitcoin and gold markets may have been caused by manipulation.
According to the news of Mining, the researchers announced that in the past few months, huge transactions have been made in the gold futures market, some transactions that can be considered as pump & dump, especially in the futures copper market, and deceptive transactions have been made in some crypto exchanges.
Professor from the University of Sussex Business School. Dr. Carol Alexander; summarizes the recent activity in the market as follows:
“Under normal conditions, investors leaving the stock market turn to markets such as gold and Bitcoin. However, these safe ports acted in the opposite direction to what was expected during the Coronavirus days. Bitcoin and gold prices began to fall simultaneously with the stock market… When the S & P500 crashed in March 2020, gold experienced the worst week of eight years, normally it should have been on the rise during this period. The reason for this was the huge short selling in COMEX futures. We think that the price of Bitcoin has also decreased due to manipulation bots, especially in derivative exchanges such as BitMEX. ”
According to Carol Alexander, financial regulators have recently been unable to detect revolving manipulations on the market as they deal with coronavirus. For this reason, manipulators can make transactions that are not allowed in COMEX under normal conditions. Alexander said that the regulators overlooked the huge short selling operations in the market. he thinks this will affect the world economy badly.
There is a collapse in the market due to the unethical decisions of a handful of investors and the world economy may never be able to overcome this collapse. ”