Bitcoin
Is Bitcoin the next asset to follow the rise?
Quick take
As economic uncertainty approaches, traditional safe haven assets such as gold, silver and copper are reaching new heights. Gold recently reached a new all-time high of $2,443 an ounce, up nearly 20% year-to-date. Silver is approaching $32 per ounce, its highest level since October 2012, while copper is trading above $5, an all-time high.
Gold, Silver and Copper Price: (Source: TradingView)
The rise in precious metals and industrial raw materials can be attributed to several factors. Concerns about inflation are rising, with 5- and 10-year inflation expectations hovering around 2.3%, above the central banks’ target of 2%. Inflation expectations have remained above 2% since January 2021.
The search for safe havens is also driving investors towards these assets, as 11 of the last 14 rate increase cycles ended in a recession, while interest rates are at their highest level in more than 20 years in the USA.
Furthermore, changes in investment and geopolitical uncertainties, such as ongoing wars and upcoming elections, may be contributing to the recovery. An increase in copper prices could signal higher costs of goods and production or even economic growth.
Although WTI and Brent crude oil prices fell more than 10% from their April highs, they still registered a year-to-date increase of more than 10%. This divergence could indicate the beginning of an economic slowdown as oil demand weakens.
Interestingly, as traditional safe havens shine, Bitcoin, often touted as “digital gold” due to its limited supply, decentralization and potential hedge against uncertainty, trades at around $67,000. With the US stock market also at all-time highs, the question arises: will Bitcoin be the next asset to follow the rally?