The dollar is on the back foot during early Thursday trading, shedding some of yesterday’s gains that followed the publication of the minutes for the April FOMC meeting. The greenback found support on Wednesday because the minutes of the Fed’s monetary committee mentioned that if the economy keeps recovering it may be appropriate, at some point in the future, to start thinking about adjusting the pace of asset purchases. However, the dollar gains were limited and some have already been lost, as on second glance, the revelation that Fed officials admit that at some point the current policies will need to be reviewed doesn’t mean the central bank is about to change its current accommodative stance, especially as members of the committee were quick in pointing out that the economy is still a long way off from being back on track.
To put things into context, gold lost 45% of its value over the space of over 4 years between late 2011 and the end of 2015. Yesterday it moved in a range of around 2%.
By contrast, bitcoin has fallen as much as 55% from the peak reached on the 14th of April, dipping for a few minutes below $30,000. Despite later recovering to $38,000-$40,000, what shocks potential investors is the speed as well as the percentage of decline. Indeed, cryptos are an explosion of volatility, both when the price is going up and during a sell-off.
The majority of inventors do not fully understand the risk related to crypto-trading.
The recent collapse of cryptos are a useful reminder to investors that e-currencies are – just like every other financial asset – subject to market movement or even riskier due to the lack of clarity of crypto exchanges, with the majority suffering from poor liquidity and an absence of fundamentals to support them.
Therefore, any comparison between gold and bitcoin doesn’t stack up and probably never will do.
Experienced writer and journalist, working in the global online trading sector, Steffy is the Editor of LeapRate. She has previous experience as a copywriter and has been with the company since January 2020. Steffy has a British and American Studies degree from St. Kliment Ochridski University in Sofia.