Is the recent silver rally linked to Bitcoin volatility?

21 Jul, 2019 | Updated: 21 Jul, 2019
by David Robb
Analysis
Is the recent silver rally linked to Bitcoin volatility?

Silver has recently seen its biggest weekly price increase since 2016. One analyst has claimed, in an interview with CNBC, that this could be related to a loss of confidence in BTC as an asset.

Bitcoin (BTC) is increasingly seen as 'safe haven' asset by many traders, and its potential as a store of value to rival gold is arguably its most important use case. However, the recent price plunges seen by BTC may have led some investors to shift their funds into silver, as a third store-of-value option.

According to veteran futures and options trader Jim Iuorio, "I think one of the reasons that silver’s rallied...is because Bitcoin’s kind of been taken off the list of safe havens with its recent volatility, so something had to replace it." While Bitcoin has dipped from a weekly high of above $11k (down $2k from its yearly high just a few weeks ago) to a low of $9180 over the past seven days, silver has been climbing steadily, up to a new 2019 high on Thursday. Gold followed suit, just 24 hours later, trading at its highest level for six years.

Iuorio claimed that this silver rally may be at an end for now, and that the trend towards investment in store-of-value assets as opposed to fiat currencies will continue, with BTC perhaps regaining some ground again soon: "I think the move out of fiat currencies is still real. If interest rates are going to stay below 2% in the United States, if they’re going to stay negative in Europe (and) in Japan, where else are you going to put your money? And that’s where you look at the metals, you look at cryptocurrency as a place to do that".

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