In a notable development, Bitcoin and gold surged to new record highs during Monday’s trading session amidst volatile market conditions, fueled by ongoing crypto enthusiasm and persistent demand for the precious metal across global financial markets.
Over the past weekend, both Bitcoin and various alternative cryptocurrencies experienced significant gains, with some reaching unprecedented levels while others attained their highest points in years. Bitcoin briefly returned to the $70,000 mark, reflecting the fervor surrounding digital assets.
As the US dollar weakened and yields on US Treasury bonds declined, gold witnessed a substantial surge this week, surpassing $2,187 per ounce.
However, both assets remain technically overbought, particularly in anticipation of crucial inflation data from the world’s largest economy in the upcoming week.
Further bolstering market sentiment is the anticipation of an Ethereum blockchain upgrade, home to the second-largest cryptocurrency, ether, and an impending Bitcoin “halving” event in April, which reduces the rate of Bitcoin issuance. In recent weeks, billions of dollars have flowed into exchange-traded funds (ETFs).
The approval of eleven spot Bitcoin ETFs in the US marks a significant milestone for the industry, following the Securities and Exchange Commission’s decision in late January. This decision comes after an 18-month period marked by corporate bankruptcies and scandals within the crypto space.
Even institutional investors, traditionally wary of cryptocurrencies due to their volatility, are now entering the market with long-term investment strategies, potentially fueling the ongoing surge. Notably, net flows into the top ten US spot Bitcoin funds totaled $2.2 billion in the week ending March 1, with over $2 billion invested in BlackRock’s iShares Bitcoin Trust (IBIT).
Renowned hedge fund manager Bill Ackman shifted his focus to Bitcoin, suggesting a scenario where the cryptocurrency’s price could exceed expectations. Ackman outlined how Bitcoin’s price rise leads to increased mining and energy consumption, driving up energy costs, inflation, and demand for Bitcoin in a cyclical manner.
In the precious metals market, spot gold prices saw a marginal increase to $2,180 per ounce on Monday, following a recent peak last Thursday—the highest level since 1979. Conversely, spot silver prices rose by 0.2% recently, settling at the highest level since late December last week.
The surge in precious metal prices can be attributed to growing expectations of interest rate cuts by the United States. Federal Reserve Chair Jerome Powell hinted at the possibility of rate reductions, stating that the inflation rate is nearing the threshold that warrants central bank intervention.
Despite high interest rates and a strong US dollar, gold, considered a safe-haven asset during times of financial uncertainty, has rebounded strongly.
