According to market analysts, both Bitcoin and gold have been rising in recent days, driven by factors such as increased global liquidity, expansion of central bank balance sheets and recent interest rate cuts by the Federal Reserve. Bitcoin has risen 7% in the past five days, breaking through $64,000 for the first time since August; while gold has also hit a new high this year, reaching $2,600 per ounce.
Charlie Bilello, chief market strategist at Creative Planning, noted that this is the first time since Bitcoin's creation in 2009 that both Bitcoin and gold are among the best performing assets of the year.
Analyst James Van Straten attributes this outperformance to several factors, including the expansion of central bank balance sheets around the world and the Federal Reserve's decision to cut interest rates by 50 basis points to stimulate investment and economic activity. The Fed's balance sheet now stands at $7.1 trillion, and while quantitative tightening is continuing, the pace has slowed. The reduction in reverse repo balances, currently at just over $300 billion, has added liquidity to the financial system, stimulating lending, investment, and overall economic growth.
Globally, the total balance sheets of the world's 15 largest central banks, including the United States, the European Union, Japan and China, have risen to nearly $31 trillion. This trend has continued to rise since July, indicating that global liquidity is recovering, which is particularly beneficial to Bitcoin, a cryptocurrency that is closely related to liquidity trends.
The Federal Reserve's rate cuts have further boosted Bitcoin and gold, as lower interest rates tend to encourage investment in riskier alternative assets. Analysts say increased liquidity and stimulus measures are helping both assets reach new highs, solidifying their status as top assets in the current economic environment.