Bitcoin's stagnation, gold's record high reflect ongoing market caution: Bitfinex

Quick Take

  • Bitcoin’s inability to break out past the $60,000 mark — coupled with gold reaching an all-time high — reflects a propensity for risk aversion in the market, according to Bitfinex analysts.
  • The price of gold climbed to a fresh all-time high on Monday, as rising bets for a 50 basis-point Fed rate cut this week act as a tailwind on the safe-haven asset.

Bitfinex analysts point to bitcoin's decoupling from gold — which recently reached an all-time high — as a sign that investor caution persists amid potential recessionary indicators.

"Bitcoin has decoupled from gold, which has reached a record high, indicating a shift in investor preference towards traditional safe-haven assets amidst a risk-averse environment," Bitfinex analysts said.

The bitcoin price has ticked down by over 3% in the past 24 hours, now trading at $58,700. In recent days, it has struggled to sustain a rally above the $60,000 level. In contrast, gold hit a record high of $2,589 earlier on Monday. "Bitcoin prices are dropping while gold reaches new record highs," Bitfinex analysts said. The analysts noted that the trend of investors favoring traditional safe-haven assets like gold over more speculative options such as bitcoin could intensify following a rate cut.

With the U.S. Federal Reserve expected to initiate its first rate reduction in four years this week, this shift towards traditional safe-haven investments might become even more pronounced. "As such, the only foreseeable certainty in the immediate future is an increase in local volatility at these price levels, and traders and investors should prepare for potentially rapid and significant price movements," Bitfinex analysts added.

Analysts attribute gold's surge to record highs on Monday to several factors, including a weakening dollar and rising expectations of a significant interest rate cut by the U.S. Federal Reserve this week.

The anticipation of a Fed rate cut cycle has weighed on the dollar, driving gold in the opposite direction. Sentiment toward the traditional safe-haven asset has also been bolstered by recessionary indicators, such as slowing job growth.

The last ADP employment report showed that only 99,000 jobs were created in August, well below the forecast of 140,000 and marking the smallest monthly job increase in over three and a half years.


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About Author

Brian McGleenon is a UK-based markets reporter for The Block. He has worked as a financial journalist and producer for multiple news outlets over the years, such as Fuji Television, The Independent, Yahoo Finance, The Evening Standard, and The Daily Express. Brian is also a screenwriter and producer with one feature film produced and one in development with Northern Ireland Screen. Apart from web3 and cryptocurrency developments, he is also interested in geopolitics, environmental issues, artificial intelligence, and longevity research. Get in touch via email [email protected].

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