Bitcoin set at $30,000 while gold is near ATH
While the gold price rose 2.1% yesterday and is now near an all-time high, the Bitcoin price is today staging another attempt to break through the $28,8000 to $29,000 resistance range that has been in place since mid-March. The latest macroeconomic data and a gold price that continues to thrive could provide the impetus needed to break out of the current consolidation phase.
At $2,042 an ounce, gold is just a few dollars away from its 2020 record high of $2,069.40. The traditional safe haven asset is up 13% in the past month, while Bitcoin is up 27% in the past 30 days. Thus, both assets have risen in tandem (Bitcoin with higher beta) in recent weeks.
Digital #Goldaka #Bitcoincollected in tandem with analogue gold. pic.twitter.com/tOH41oIKXi
— Holger Zschaepitz (@Schuldensuehner) April 4, 2023
Is Bitcoin Finally Proving To Be Digital Gold?
The recent rise in gold prices is due to a weaker US dollar, lower expectations for policy rates and geopolitical tensions, according to analysts at The Kobeissi Letter. In addition, there is growing concern about the looming threat of a recession in the US later this year.
In recent years, the inverse correlation between gold and the US dollar has been evident. And it’s the same now. In recent weeks, the US dollar has come under considerable pressure. Countries such as Saudi Arabia, Russia and Brazil trade with China in Chinese yuan instead of USD. This has put pressure on the dollar and thus supported the price of gold.
Meanwhile, in the US, the Federal Reserve is still facing a regional banking crisis that is far from resolved. This crisis resulted in nearly $400 billion being withdrawn from US banks in just four weeks, as reported by The Kobeissi Letter.
Investors are apparently looking to safe-haven assets like Bitcoin and gold as the weaknesses of the banking system have become apparent. And yesterday’s macro data continues to play into the hands of both.
Weaker-than-expected factory orders in February and an unexpected drop in job vacancies to 9.931 million against expectations of 10.5 million (down from 10.824 million last month) are the first signs that the Fed’s tightening policy is having an impact on the labor market and, by extension, the economy.
Fewer jobs on offer point more clearly than before to a cooling economy, reducing pressure on the Federal Reserve to raise interest rates.
This led to markets yesterday again reinforcing expectations that the Fed will soon end interest rate hikes and start cutting interest rates later this year, sparking the rally in Bitcoin and gold. Analyst Joe Consorti wrote via Twitter:
There it is. Fed funds futures are pricing in a less than 50% chance that the Fed will hike 25 bps at the May meeting. Bad ISM data, crude oil demand is falling, labor demand is falling, prices are falling fast – the market smells the downturn. Pause ⏸️
At press time, the Bitcoin price rose to $28,545 in the wake of the macro conditions. After the recent peak, the zone between $28,450 and $28,500 needs to be defended by the bulls. If this area acts as support in the event of a retest, a rally towards $30,000 could be in the cards.
Featured image from iStock, chart from TradigView.com
