Following recent record highs in Bitcoin and gold prices, this strong rebound has sent mixed messages about risk appetite in global markets.
The cryptocurrency and precious metals' double peak marks the first simultaneous records for the two since Bitcoin emerged from the shadows more than a decade ago. However, there are typically thought to be markedly different motivations driving each asset – gold has served as a store of value for thousands of years, while any role for Bitcoin beyond pure speculation is hotly contested.
Bitcoin has jumped nearly 57% this year, boosted by inflows into recently launched US exchange-traded funds that hold the digital currency directly. However, gold's rise could be seen as a signal of a defensive stance over concerns about the risks of geopolitical tensions or a potential pullback in global stocks in the wake of a record rally.
One way to solve this problem is to look at the behavior of traders who chase short-term momentum across asset classes, according to Chris Weston, head of research at Pepperstone Group Ltd.
“Gold traded a lot overnight, the trading volumes are huge – I've been getting a lot of customer calls asking what's going on,” Weston said. Fast money investors are “buying momentum and that is what we are seeing in Bitcoin as well.”
Both Bitcoin and gold are seen as beneficiaries of monetary policy expectations. Swaps markets show a 62% chance of a rate cut by the Fed in June, compared to 58% at the end of February.
Bitcoin rose to a record high of $69,191.95 on Tuesday in the US - surpassing the peak the token reached in November 2021 during the pandemic - before pulling back on profit-taking.
Gold rose to a peak of $2,141.79 an ounce on Tuesday, surpassing the previous high set in early December. Today, it exceeded the level of $2170 per ounce.
“The story of cryptocurrencies can be linked to what is happening in equity markets and risk more broadly,” said Kyle Rodda, senior market analyst at Capital.Com Inc. “We are seeing the resurgence of high-risk memes.”
---
Know the fair value of every stock and get pre-made investment stock lists with guaranteed profits, as well as historical and live data and important notes for every stock with the InvestingPro platform. All you have to do is sign up and type the name of the stock to get everything you need. Learn more about the InvestingPro tool here
You can get an additional 10% discount when using the sapro2 coupon with all packages for one or two years with the Pro and Pro Plus tool. To subscribe, click here
If you encounter any problem using the coupon, you can contact support immediately from here
----
