As inflation begins to rise and the job market shows signs of weakness, both Bitcoin (BTC) and precious metals have reached record values amidst a decline of the US dollar (USD). Market analysts from The Kobeissi Letter indicate this shift could mark a significant macroeconomic trend.
The S&P 500 index has seen an increase of over 40% in just six months, while Bitcoin achieved an all-time high exceeding $125,000 last Saturday. Gold prices are also climbing towards an all-time peak of $3,880 per ounce. Kobeissi Letter noted:
“The correlation coefficient between gold and the S&P 500 reached a record 0.91 in 2024.”
This striking relationship between typically safe investments and riskier assets suggests a transition in market behavior and expectations of a new monetary policy, added Kobeissi.
“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.”
This analysis arrives in light of a US government shutdown and a series of downward adjustments in job statistics, signaling a weakening labor market. These factors contribute to a favorable environment for Bitcoin, fostering investor confidence as concerns about the dollar’s declining value grow.
Analysts Believe Macro Factors Drive Bitcoin Surge
The recent uptick in Bitcoin prices has also been attributed to macroeconomic influences, primarily the recent US government shutdown, according to Fabian Dori, Chief Investment Officer at Sygnum.
The shutdown, initiated last Wednesday, has significantly hindered the operation of regulatory bodies, effectively placing them into a state of minimal functioning.
Dori points out:
“The political dysfunction stemming from the shutdown has renewed investor interest in BTC as a store-of-value monetary technology.”
Related: Bitcoin corrects from $125K all-time high: Where will BTC price bottom?
