Bitcoin and gold hit record highs together for the first time
Global markets are experiencing a whirlwind of mixed signals as Bitcoin and gold both hit record highs. This marks the first concurrent peak for the two assets since the emergence of Bitcoin over ten years ago. However, each asset’s distinct driving factors could create confusion – gold has long been a safe store of value, while Bitcoin’s function beyond pure speculation remains disputed.
This year, Bitcoin has seen a nearly 50% increase, boosted by flows into newly created US exchange-traded funds that directly hold the digital currency. Conversely, gold’s surge might suggest defensive manoeuvring due to worries over geopolitical tension or a potential slump in global stocks following a record-breaking streak.
Chris Weston, Pepperstone Group Ltd’s head of research, suggests that the key to understanding this phenomenon lies in the behaviour of traders pursuing short-term momentum across various asset classes. He highlighted the extensive overnight trading activity in gold and revealed that numerous clients have been seeking explanations. Weston also noted a similar momentum-driven buying trend in Bitcoin.
Both Bitcoin and gold are perceived as likely winners from the anticipation of a more relaxed monetary policy. Swap markets indicate a 62% likelihood of a Federal Reserve interest-rate reduction in June, an increase from February’s 58%.
Bitcoin reached an all-time high of US$69,191.95 yesterday, March 5, in the US, surpassing the peak it hit in November 2021 during the coronavirus pandemic. It then dropped to trade at around US$63,300 by Wednesday noon in Singapore.
Meanwhile, gold climbed to a high of US$2,141.79 per ounce yesterday, exceeding the previous record set in early December. The precious metal has risen nearly 5% in the past five trading sessions, reported Bangkok Post.
Senior market analyst at Capital.Com Inc., Kyle Rodda, noted that the current dynamics in the crypto market could be correlated with broader risk-taking in equity markets. He pointed out a resurgence in meme coins indicating irrational, risk-oriented behaviour, aligning with occurrences in certain sectors of the equity market.
