Bitcoin Shows Split Character as Gold Soars, Experts Say

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Gold just hit $3,742 an ounce. Record high. Bitcoin? Down to $112,475. Quite a drop from recent peaks. These opposite moves seem to reveal something interesting about how these assets work in today's economy.

The Highlights:

Gold touched $3,742 after some talk about inflation being under control. Bitcoin fell to its lowest point since July at $112,475.

Market folks think Bitcoin's acting weird because it's kind of two things at once - safe storage and risky bet.

Bitcoin and gold aren't moving together much this year. Might change though. Not entirely clear.

Looking back, Bitcoin usually jumps about 150 days after gold hits new records. Interesting pattern.

Gold up, Bitcoin down

Monday saw gold reach that all-time high of $3,742 per ounce. Big officials were saying inflation wasn't a problem anymore. Prices heading down.

Bitcoin took the other path. Dropped to $112,475. Lowest since July. That's 13% below where it was in August when things were looking great. These assets are really going their separate ways.

Two-faced Bitcoin

Tony Sycamore, market analyst, calls this Bitcoin's "split personality."

"Bitcoin shows two different behaviors - sometimes it's like a value store similar to safe things, other times it acts like a risky bet," Sycamore said. The connection with gold seems broken now.

Vince Yang from zkLink added:

"Gold sticks to its job as the classic safe-haven, but Bitcoin moves with market cash flow and risk hunger. They sort of complete each other rather than copy."

Maybe they'll reconnect?

Sycamore thinks Bitcoin might start following gold again. Especially if the Fed keeps cutting rates while inflation sticks around.

"Looking at the bigger picture, if policies keep supporting growth and the Fed continues cutting rates, I think Bitcoin will start moving with gold again - we just don't know from what price Bitcoin will steady itself," he said.

Bitcoin follows eventually

History shows Bitcoin often plays catch-up to gold. When gold broke $2,000 back in 2020, Bitcoin waited a bit then shot up to $69,000 the next year.

Joe Consorti noticed Bitcoin typically follows gold's direction within about 150 days. So maybe Bitcoin will copy gold's current jump later in this cycle. We'll see.

BTC-0.18%
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