Bitcoin Outperforms Chinese Commodity Markets in 2016
The decentralized nature of Bitcoin makes it an outlier when it comes to tradeable assets. The digital currency’s trading trends are, in most cases completely opposite to that of conventional financial assets, which makes it an ideal investment vehicle and a safe haven asset. The recent developments in the Chinese commodity market have proven it yet again.
The Chinese futures and commodity market took a plunge during the last week of the year, impacting raw material and energy shares. Some of the most traded commodities registered an average fall of about 20 percent. But on the other hand, during the same time, Bitcoin indices in the country registered a similar movement, but in the opposite direction.
A comparison analysis on one of the financial publication shows the top few commodities — Zinc, Iron Ore, Steel Rebar, China Coking Coal, Copper along with Bitcoin. In the past few days, Zinc has registered a fall of about 22%, Iron Ore and Steel Rebar by 20%, China Coking Coal by 25% and Copper by 13%. Compared to the average 20% loss, the Bitcoin price during the same period has increased by 18 percent, making good for the losses.
The commodity market developments follow the recent crackdown on investment banks by the Chinese market regulator and the Shanghai Stock Exchange. The government’s move to impose restrictions on certain industries including steel mills, coal-based power plants, textile and cement factories to curb pollution has also played an important role in falling commodity prices.
Many investors have started selling the shares and some of them are now looking for alternate investment vehicles with good returns. The recent rise in Bitcoin prices due to global political and economic developments has made it stand out as an attractive alternative. The total supply cap on Bitcoin, combined with its global nature guarantees better returns on investment compared to any other financial asset out there at the moment.
Bitcoin is currently hovering at around $900, with signs of it further strengthening in the coming days. More investors are expected to include Bitcoin or Bitcoin -backed ETFs in their investment portfolio soon.
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