Bitcoin Hits New ATH as US Dollar Declines, Says Analyst

Recent trends in the financial market indicate a significant rise in Bitcoin (BTC) and precious metals. Analysts from The Kobeissi Letter suggest that these increases are linked to a historic decline of the US dollar (USD), which is experiencing its worst performance since 1973. This shift in market dynamics is prompting a re-evaluation of asset values.

Bitcoin Reaches New All-Time Highs

Bitcoin recently achieved a historic milestone, hitting over $125,000. This surge is part of a broader trend that has seen the S&P 500 increase by over 40% in the last six months. Additionally, precious metals like gold have also reached record prices, with gold trading at approximately $3,880 per ounce, edging closer to the $4,000 mark.

Market Correlations and Economic Implications

• The correlation coefficient between gold and the S&P 500 stands at a record 0.91 in 2024.
• This unprecedented relationship hints at a shift toward a new monetary policy.
• Analysts highlight a “widespread rush” into various assets as inflation rises and economic conditions fluctuate.

The decline of the USD has been notable, with a year-to-date loss exceeding 10%. Since 2000, the dollar has lost approximately 40% of its purchasing power. This depreciation is compounded by a backdrop of economic concerns, including a government shutdown and downward revisions in US job figures.

Factors Influencing Bitcoin’s Surge

According to Fabian Dori, the chief investment officer at Sygnum, recent macroeconomic factors have significantly fueled Bitcoin’s price increase. The US government shutdown, which began recently, has led to reduced operations in regulatory agencies, further impacting market stability.

This political instability is causing investors to seek out Bitcoin as a reliable store of value, reflecting a growing skepticism towards traditional financial institutions. This trend emphasizes the potential of BTC as an alternative asset during turbulent economic times.

In conclusion, the recent movements in Bitcoin and related assets are prompted by a convergence of economic factors and investor sentiment. As traditional currency values decline, cryptocurrencies are becoming increasingly appealing to investors eager to safeguard their wealth.