Gold hits new ATH at $3,390, is Bitcoin close behind?
Gold surges to more than $3,390 on April 21 as more investors flock to safe-haven assets amidst economic uncertainty. A boost in gold could signal a similar pattern in crypto, specifically Bitcoin.
According to the latest data from Trading Economics, gold has hit a new all-time high amidst global economic volatility. On April 21, gold went up 2%, reaching well above the $3,390 threshold and hitting as high as $3,395 around 7:30 UTC. Analysts predict that the rise in performance could be due to rising global trade tensions and a result of the U.S. dollar growing weaker.
Just a week prior, President Donald Trump ordered an investigation into potential new tariffs on U.S. critical mineral imports. This marks a significant escalation in the trade dispute between the U.S. and other countries, particularly China . In addition, investors are starting to lose confidence in traditional fiat currencies as the U.S. dollar plummeted to a three-year low.
On the other hand, gold’s meteoric rise could signal the beginnings of a bullish rally for the crypto market. Traders have noted the the price of gold and Bitcoin ( BTC ) often go hand-in-hand, considering both are “safe-haven” assets.
Price chart comparing the movements of Bitcoin and gold on the market, April 21, 2024 | Source: TradingView
In fact, on the same day, Bitcoin reached a new monthly-high of $87,570. At press time, BTC has gone up more than 3.2% in the past 24 hours of trading. It is currently trading hands at $87,538. The last time BTC reached above $87,400 was back in March 28, before it experienced a slump in early April.
What is the historical relationship between gold and crypto?
Bitcoin has often been likened to “digital gold” by market traders and investors alike. Federal Reserve Chair Jerome Powell said that Bitcoin was a competitor for gold due to how both assets are used as a store of value rather than as a payment option.
Similarly, founder and CEO of ARK Investment Management, Cathie Wood predicted Bitcoin’s $2 trillion market cap could one day surpass gold’s $15 trillion over time. Despite having been around longer, it evidently took gold a longer time to reach $2 trillion, something that took Bitcoin only 15 years.
“At $2,700, gold is a $15 trillion market, compared to Bitcoin at only $2 trillion. Even after breaking through $100,000, Bitcoin still is in early innings,” said Wood.
Historically, positive market movements in gold are often followed by a boost in Bitcoin prices not long after. Aside from the fact that both assets are seen as “safe havens” that protect investors against the volatility of traditional fiat currencies, both also have finite supplies that need to be mined.
Despite these similarities, a Bloomberg analysis found that gold still has a much lower volatility rate compared to Bitcoin; with gold’s annual volatility rate being around 10% to 20%, while Bitcoin often exceeds 50%. Though this may be the case, analysts have also noted that macro Bitcoin trends have a tendency to follow gold’s within a few months.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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