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Home News Bitcoin Underperforms as Gold and S&P 500 Reach New Highs

Bitcoin Underperforms as Gold and S&P 500 Reach New Highs

by Barbara

Bitcoin (BTC) continued to trade above the $98,000 mark on Thursday, maintaining its range-bound movement without recovering the crucial $100,000 level. After dipping to $93,000 earlier in the week, Bitcoin has struggled to regain upward momentum since the February 3 market crash triggered by global trade war tensions.

In contrast, traditional assets such as Gold and the S&P 500 have reached new all-time highs, outperforming Bitcoin. Gold surged to a record high of $2,954.69, with its market cap surpassing $20 trillion. The rise in Gold is attributed to its status as a safe haven asset, as investors seek security amid ongoing macroeconomic uncertainties, including fears of a global trade war, the US debt crisis, and rising inflation.

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Gold’s Safe Haven Appeal Amid Global Tensions

Investors are flocking to Gold as they seek refuge from the escalating global trade tensions. A Bank of America fund manager survey revealed that 58% of fund managers believe Gold will perform best during a trade war. This trend has raised Gold’s appeal, overshadowing Bitcoin’s role as a “digital gold.”

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S&P 500 Surges Alongside Gold

In a surprising development, the S&P 500 has also hit new all-time highs, largely driven by a rally in chipmaker stocks. This has led to a slowdown in Bitcoin’s positive correlation with the S&P 500, a trend that had been noticeable over the past year. While Bitcoin had previously benefited from risk-on sentiment alongside equities, its recent range-bound price movement suggests a shift in investor focus.

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VanEck Proposes Bitcoin to Reduce US National Debt

One factor that could potentially draw more attention back to Bitcoin is the growing discussion in the US about establishing a strategic Bitcoin reserve. Asset manager VanEck highlighted the potential benefits of this approach, noting that it could help reduce the US national debt.

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According to VanEck, the US could shed up to $21 trillion in national debt by adopting the Bitcoin Act, a proposal put forward by Senator Cynthia Lummis. The Bitcoin Act suggests that the US Treasury acquire up to 1 million BTC over five years, holding them in a Strategic Bitcoin Reserve for at least 20 years. VanEck’s analysis indicates that such a reserve could offset approximately 18% of total US debt by 2049.

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This proposal aligns with the growing notion that Bitcoin, like Gold, could serve as a store of value, and a strategic reserve of Bitcoin could strengthen the US balance sheet. Should the US government take this path, it could potentially reignite investor interest in Bitcoin, similar to the recent surge in Gold investments.

Potential Future Outlook

While Bitcoin has been somewhat sidelined amid the current macroeconomic climate and rising Gold prices, the potential for a strategic reserve of Bitcoin could spark renewed interest in the cryptocurrency. As traditional markets like Gold and the S&P 500 set new highs, Bitcoin’s future could be shaped by the evolving role of digital assets in the global economy.

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