Bitcoin and gold have both been hitting new record highs, with the cryptocurrency surging following SEC approval of spot ETFs and a looming “halving” event.
Central bank buying sprees have also contributed to the surprising rise in gold prices this year.
While stocks have seen a relatively muted performance, with the S&P 500 up only 3% over the past month, the macroeconomic environment has created a favorable landscape for both gold and bitcoin.
According to analysts, these two assets are attracting different types of investors and are benefiting from different factors. However, they are both alternative asset classes that are currently in high demand.
Bitcoin, which has had a rough couple of years, has started off 2024 with a bang. It is currently trading above $73,000 and is up almost 75% since the beginning of the year. This surge was initiated by the Securities and Exchange Commission’s approval of 11 spot ETFs in January, which allowed institutional investors to enter the crypto market.
There is also excitement building around an upcoming “halving” event in April, which is expected to boost bitcoin’s price by making its supply scarcer. This event has received more attention than previous halvings due to the mainstream acceptance and increased demand for bitcoin.
On the other hand, gold’s rise has been more subtle, as it is traditionally seen as a “safe haven” asset with low volatility. However, it is still up about 4.5% year-to-date at $2,159 per Troy ounce. Central banks from various countries, including China, Turkey, and India, have been buying gold in large quantities, possibly as a way to diversify their reserves.
This trend is fueled by the expectation of the Federal Reserve cutting interest rates, which has caused the value of the US dollar to decrease. According to analysts, central banks are turning to gold as an alternative to holding too many dollars in their portfolios.
Gold’s recent rise has also solidified its status as a haven asset, with ongoing conflicts in Ukraine and Gaza and concerns over inflation contributing to market jitters.
In conclusion, bitcoin and gold are two of the hottest assets on the market right now, but for different reasons. While bitcoin’s rise is fueled by institutional investment and a looming event, gold’s rise is driven by central bank buying and its status as a safe haven asset. These two alternative asset classes are currently in high demand and are expected to continue their upward trajectory.
