Bitfinex analysts point to bitcoin's decoupling from gold — which recently reached an all-time high — as a sign that investor caution persists amid potential recessionary indicators.
"Bitcoin BTC
-2.61%
has decoupled from gold, which has reached a record high, indicating a shift in investor preference towards traditional safe-haven assets amidst a risk-averse environment," Bitfinex analysts said.
The bitcoin price has ticked down by over 3% in the past 24 hours, now trading at $58,700. In recent days, it has struggled to sustain a rally above the $60,000 level. In contrast, gold hit a record high of $2,589 earlier on Monday. "Bitcoin prices are dropping while gold reaches new record highs," Bitfinex analysts said. The analysts noted that the trend of investors favoring traditional safe-haven assets like gold over more speculative options such as bitcoin could intensify following a rate cut.
With the U.S. Federal Reserve expected to initiate its first rate reduction in four years this week, this shift towards traditional safe-haven investments might become even more pronounced. "As such, the only foreseeable certainty in the immediate future is an increase in local volatility at these price levels, and traders and investors should prepare for potentially rapid and significant price movements," Bitfinex analysts added.
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Analysts attribute gold's surge to record highs on Monday to several factors, including a weakening dollar and rising expectations of a significant interest rate cut by the U.S. Federal Reserve this week.
The anticipation of a Fed rate cut cycle has weighed on the dollar, driving gold in the opposite direction. Sentiment toward the traditional safe-haven asset has also been bolstered by recessionary indicators, such as slowing job growth.
The last ADP employment report showed that only 99,000 jobs were created in August, well below the forecast of 140,000 and marking the smallest monthly job increase in over three and a half years.
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