Rising geopolitical risks and the upcoming US presidential election are pushing investors towards traditional safe-haven assets like gold, while Bitcoin faces selling pressure amid Middle East conflicts
Rising geopolitical tensions and the upcoming US presidential election are pushing investors towards traditional safe-haven assets like gold, while Bitcoin faces selling pressure amid Middle East conflicts.
According to J.P. Morgan analysts, the increasing global tensions and November’s US election are amplifying what some investors refer to as the “debasement trade.” This trade favors both gold and bitcoin as hedges against currency devaluation. However, recent market movements show diverging paths for the two assets.
“Rising geopolitical tensions and the coming US election are likely to reinforce what some investors call the ‘debasement trade’ thus favoring both gold and bitcoin,” analysts from J.P. Morgan Global Markets Strategy stated in a note on Thursday.
Gold prices have seen a surge in recent weeks, approaching $2,700 per ounce on September 26. The analysts attribute this rise to a 4-5% decline in the dollar and a substantial drop in real US Treasury yields. Despite these factors, gold’s appreciation has exceeded what they alone would suggest, indicating renewed interest in the metal as a safe haven.
Highlighting historical trends, CryptoQuant observed that lower US Treasury yields have coincided with rising gold prices. “In 2008, as the 13-week Treasury Bill yields decreased, gold prices soared from $590 to a peak of $1,900 per ounce by 2011,” the firm noted. “A similar trend is emerging now, with gold climbing from $2,000 to nearly $2,700.”
In contrast to gold's gains, Bitcoin encountered selling pressure amid escalating Middle East tensions. Following Iran’s missile attacks on Israel, US spot Bitcoin ETFs experienced significant outflows, reversing an eight-day inflow streak as Bitcoin retreated below $62,000.
According to data from Farside Investors, BlackRock's iShares Bitcoin Trust (IBIT) was the only fund to see net inflows on Tuesday, taking in over $40 million. However, this was offset by outflows from other funds, resulting in over $242 million in net outflows across US spot Bitcoin ETFs.
The contrasting movements of Bitcoin and gold have reignited discussions about Bitcoin's role as a safe-haven asset. As news of Iran’s missile strikes emerged, Bitcoin's value declined by over 3% in 24 hours, dropping nearly $4,000 to around $60,300. During the same period, gold prices rose by 1.4% to $2,665 per ounce, approaching a record high.