Trading around $68,000 a unit, Bitcoin remains below record levels while gold prices and the S&P 500 continue to hit new highs.

Bitcoin's (BTC) 8% gain this week has outperformed gold and the S&P 500. But the cryptocurrency is still trading below its all-time high, while the precious metal and the U.S. benchmark stock index have both climbed to new records.

Amid Middle East tensions, gold has hit $2,720 an ounce, up 32% year-to-date and on track for its best annual performance since 2010 (when it was up 38%). The S&P 500 has gained about 23% over the past 10 months. Bitcoin, meanwhile, has failed to set a new record after about seven months of declines and flatlining (it’s still up more than 50% year-to-date).

Why is there no new record for Bitcoin? According to the CoinDesk analysis team, the main reason why the cryptocurrency is lagging behind in the current asset class race is the aftermath of the record high above $73,700 in March. The team assessed the previous record as "too far, too fast". At that time, the price of the world's largest cryptocurrency had increased fivefold compared to 14 months ago, if only counting the first 10 weeks of 2024, BTC doubled in price.

Going into more detail, there has been a lot of strong selling pressure recently, including the German government selling off a large confiscated Bitcoin stash and the Mt Gox trust exchange starting to return token debt to their owners.

There is also the fact that BTC trades 24/7, so it is subject to more pressure and volatility than other assets. This can lead to more liquidations in the crypto market during times of instability, pushing prices down even further.

Looking ahead, however, Bitcoin still has many positive signs. According to data from the Glassnode exchange, from "small fry" investors - those holding less than one BTC - to "whales" (those owning 1,000-10,000 tokens) have accumulated assets in the past few months. This shows that demand is not explosive but still maintained steadily in the market.

With further rate cuts from Western central banks on the horizon, the expected dominance of crypto-friendly presidential candidate Donald Trump, and a massive surge in inflows into BTC investment funds, CoinDesk experts say there is still a scenario for Bitcoin to set a new record.

Another positive but overlooked catalyst for the market is the renewed weakness in the yen. Japan just released new data showing headline inflation at 2.5%, marking the lowest level since April and down 0.5% from the previous month. Core inflation also fell significantly. This news could signal that the Bank of Japan (BOJ) does not need to raise interest rates any further.

In early August, the BOJ’s small rate hike sent the yen soaring and global markets, including Bitcoin, crashing for a few days. However, the yen peaked in mid-September at around 140 to the dollar and has been on a near-constant decline ever since. Following the news, the Japanese currency also fell to 150 to the greenback, its weakest level since early August.

“Japan has no inflation problem and little urgency to tighten monetary policy,” said Bob Elliott, CIO at Unlimited Funds, noting that services inflation has fallen to near zero in recent months while Japan’s GDP has fallen into negative growth.

Over the past five years, Bitcoin has risen more than 1,000% against the yen, but much less than other currencies. A similar pattern has been seen in gold, which is up 150% against the yen and only 80-90% against other major currencies.

(theo CoinDesk )


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