Key Takeaways
- •Bitcoin and precious metals are hitting new all-time highs amid a turbulent macroeconomic environment.
- •The U.S. dollar is experiencing its worst year since 1973, signaling a major shift in monetary policy.
- •Safe-haven assets and risk assets are now showing high correlation, reflecting a complex market repricing.
- •US economic concerns, including government shutdowns and weakening labor data, have fueled investor interest in crypto.
- •Analysts attribute the Bitcoin rally primarily to macroeconomic factors and global financial instability.
Precious metals and Bitcoin (BTC) are soaring to new all-time highs, alongside equities like the S&P 500, as the U.S. dollar (USD) faces its steepest decline since 1973. Market analysts at The Kobeissi Letter describe this as a “generational” macroeconomic shift shaping investment behavior in 2024.
The S&P 500 has gained over 40% in just six months. Meanwhile, Bitcoin surged past $125,000 on Saturday, marking a new historic high, and gold is trading around $3,880 per ounce — approaching $4,000, as noted by Kobeissi Letter writers. The correlation between gold and the S&P hit a record 0.91 in 2024, underscoring an unusual pairing of traditional safe-havens and risk assets, signaling markets are adjusting to a “new monetary policy,” the analysts explained.
“There is a widespread rush into assets happening right now. As inflation rebounds and the labor market weakens, the Federal Reserve is cutting rates. The USD is now on track for its worst year since 1973, down over 10% year-to-date. The USD has lost 40% of its purchasing power since 2000.”
Amid a government shutdown, coupled with downward revisions of US jobs data indicating a weakening labor market, the dollar’s erosion and expectation of interest rate cuts create bullish catalysts for Bitcoin’s price. These macro factors are prompting more investors to view Bitcoin as a resilient store of value amid economic uncertainty.
Related: Bitcoin corrects from $125K all-time high: Where will BTC price bottom?
Analysts Say Macroeconomic Conditions Are Driving Bitcoin’s Record Highs
Bitcoin’s recent rally to a new all-time high is largely attributed to ongoing macroeconomic developments, according to Fabian Dori, chief investment officer at the global digital asset bank Sygnum. The recent US government shutdown, which began midweek, has led to operational disruptions across key regulatory agencies and government bureaucracies.
Dori emphasized that the political gridlock arising from the shutdown has rekindled investor confidence in Bitcoin’s role as a digital store of value, especially as trust in traditional institutions faces increased skepticism. This shift is further supported by the broader macroeconomic environment, which incentivizes movement into assets that preserve wealth during turbulent times.
Overall, the rising prices of Bitcoin and precious metals highlight growing concerns about the long-term stability of the U.S. dollar and the global financial system, with investors increasingly looking toward alternative assets that retain their value amid economic uncertainty.