Bitcoin has rallied 8% this week, outperforming gold and the S&P 500, yet it still remains below its all-time high. In contrast, gold has surged past $2,700 per ounce, marking a significant increase year-to-date, while the S&P 500 has attained new heights above 5,870 on Thursday.

• Gold has reached a new all-time high at $2,718, an increase of 32% year-to-date, following a consistent recovery trend.
• Bitcoin, despite a 15% rise from its October lows, remains about 8% shy of its former record high set earlier this year. However, it is still over 50% higher than where it began the year.
• A recent downtrend in the Japanese yen has been recognized as a positive indicator for risk assets including cryptocurrencies.

Why hasn't Bitcoin set a new record?

The sluggish performance of Bitcoin since its peak includes significant fluctuations and markets responding to external pressures, such as forced sales by the German government of seized Bitcoin assets and the return of tokens by the Mt. Gox trustee. Additionally, Bitcoin's nature as a 24/7 trading asset contributes to increased volatility and more frequent 'liquidation cascades,' pushing its price lower than its inherent value.

Insight into market dynamics

As Bitcoin trades continuously, it faces greater exposure to leverage compared to traditional assets. The distribution that occurred over the summer reflected a considerable sell pressure towards the cryptocurrency. However, upcoming trends indicate signs of accumulation among both small holders ('shrimps') and large holders ('whales'). Graphed data from Glassnode clearly indicates this activity.

Future outlook

With potential rate cuts anticipated from major Western banks, the rise of pro-crypto sentiments led by candidates such as Donald Trump, and increasing flows into Bitcoin ETPs, the likelihood of achieving new highs remains within sight.

Japan has recently exhibited lower headline inflation numbers, signaling a potential slowdown in their central bank's rate hikes. As noted by Bob Elliott, CIO at Unlimited Funds, "Japan has no inflation problem and little urgency to tighten."

In five years, Bitcoin has appreciated over 1,000% against the yen, suggesting that continued yen weakening may catalyze further interest and investment in Bitcoin compared to other currencies.