Precious metals and Bitcoin (BTC) are reaching unprecedented heights, along with risk assets such as stocks, as the US dollar (USD) is poised for its worst annual performance since 1973, indicating a “generational” macroeconomic transition, according to market analysts at The Kobeissi Letter.
The S&P 500 stock market index has increased by over 40% in the past six months, BTC achieved a new all-time high of over $125,000 on Saturday, and gold is also trading at record levels — $3,880 per ounce at this moment — approaching $4,000, stated the Kobeissi Letter wrote.
“The correlation coefficient between gold and the S&P 500 has reached an unprecedented 0.91 in 2024,” the analysts noted, asserting that this unusual connection between safe-haven assets and risk assets suggests that markets are now acknowledging a “new monetary policy,” Kobeissi added:
“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 currently 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.”
This analysis arises amid a US government shutdown, significant downward revisions of US job numbers indicating a weakening labor market, interest rate cuts, and heightened concerns about the diminishing value of the dollar, all acting as positive price triggers for BTC.
Related: Bitcoin corrects from $125K all-time high: Where will BTC price bottom?
Analysts concur that new BTC all-time high is driven by macroeconomic factors
BTC’s ascent to a new all-time high was propelled by macroeconomic influences, including the recent US government shutdown, according to Fabian Dori, chief investment officer at global digital asset bank Sygnum.
The US government shutdown that commenced on Wednesday shut down operations at regulatory agencies and bureaucracies completely or compelled them to operate on a minimal budget and reduced staffing.
The “political dysfunction” resulting from the shutdown has rekindled investor interest in BTC as a store-of-value monetary technology, as trust in conventional institutions diminishes, Dori told Cointelegraph.
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