Tue. Oct 20th, 2020

Bitcoin is still struggling to break through strong resistance at $12,000, but the good news is that its hash rate has hit a new all-time high. Historically, the crypto’s price has followed its hash rate, which is an estimate of the amount of computing power being devoted to processing transactions on the blockchain. Data from Blockchain.com confirms that on August 15, Bitcoin’s seven-day average hash rate reached a new peak of 129.075 TH/s. The achievement comes after two weeks of fairly stagnant hash rate growth.

Bitcoin surged past $12,000 twice in August before falling back into the same mid-$11,000 range. The price continues to meet resistance at the $12,000 level, remaining between $11,700-$11,900 range over the weekend. 

Gold-bitcoin correlation

With many investors turning their backs on traditional finance due to fears over the impact of central bank money printing in response to the Covid-19 crisis, a stronger correlation between bitcoin and gold may emerge in 2020. Billionaire investor Warren Buffet recently surprised observers when he dumped his bank holdings in favor of gold miner stocks. He has traditionally taken a dim view of the safe-haven asset as an investment, so his decision is seen by observers as an indication that he sees choppy waters ahead, particularly for the banking sector as the spectre of negative rates looms on the horizon.

This could be good news for bitcoin, an asset the elderly American regards with contempt. In an interview with CNBC in 2018, he called the leading crypto a “mirage,” adding that “the idea it has some huge intrinsic value is a joke in my view.” He has also called it a “gambling device” and “rat poison squared.”However, TV presenter and bitcoin proponent Max Keiser says the Berkshire Hathaway tycoon’s move into gold could help push the crypto to $50,000. The Heisenberg Capital founder says the influential investor’s move supports the emerging safe-haven narrative, which will help make assets that are expected to behave in a counter-cynical manner such as silver and bitcoin more attractive to the mainstream.

Buffett has missed out on several investments such as Apple and Amazon as “his timing is poor.” At the same time, Buffett “shunned gold for 20 years while gold outperformed Buffett for 20 years.” Because he has seen the light with gold, Keiser thinks Buffet – along with bitcoin-bashing gold bug Peter Schiff – he will be forced to reconsider his position..

“My guess is that Buffett (or whoever takes over after he passes) will start panic-buying bitcoin at $50,000, just like Peter Schiff will do,” said Keiser. “The only major player in the money management business that knows what they’re doing is Paul Tudor Jones, who I expect will take his Bitcoin allocation up from the current 2% of the portfolio to 10% in the near term.”

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