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Gold and Bitcoin both hit new all-time highs, rekindling discussion about whether the two assets are more intertwined than previously believed. Bitcoin is a decentralized scarce asset that has historically been framed as digital gold – a hedge against inflation and the volatility of fiat currencies.
Simultaneous ATHs
At this point, the analogy is being tested in real time as both assets break records almost simultaneously. With the help of 100- and 200-day moving averages, Bitcoin’s price surge to about $124,000 technically represents a strong uptrend after a clean breakout from consolidation.
In a similar vein, gold has continued to rise above $3,900, reflecting a strong demand in a macro environment characterized by optimism on the market and ongoing monetary uncertainty. Although both assets are showing significant momentum, their routes to new highs could not be more dissimilar given the relative stability of gold and the volatility of Bitcoin.
But at their core, the forces driving both rallies are similar: investors are moving away from traditional stocks in greater numbers due to worries about inflation, government debt and geopolitical unrest. The historical dependability of gold is being rediscovered by institutional players, who are also adopting Bitcoin due to its transparency and limited supply, which appeal to the same risk-averse but return-seeking approach.
Bitcoin's liquidity cycles
Though the relationship is not constant, correlation data from recent months indicates that gold and Bitcoin have occasionally moved in tandem during macro shocks. While Bitcoin frequently responds to liquidity cycles and sentiment in the tech sector, gold continues to be the preferred safe haven during times of global unrest.
Despite the stark differences in their audiences and risk profiles, the simultaneous ATHs indicate that both assets are being treated as hedges against systemic risk. If this trend holds, Bitcoin may become more of a contemporary alternative to gold rather than merely a speculative asset, though traders should anticipate much more dramatic fluctuations along the way.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team