Gold and Bitcoin surged after President Trump’s comments linking wealth to power, with gold reaching $3,385 and Bitcoin rising to $87,500. Despite historical patterns, Bitcoin’s price increased during a dollar decline, indicating a potential shift in its role as a safe haven. Data suggests Bitcoin correlates more with tech stocks than with gold, challenging the narrative of it being ‘digital gold.’
Gold and Bitcoin, often referred to as ‘digital gold’, experienced significant gains in early Asian trading following President Trump’s remarks on Truth Social. He stated, “THE GOLDEN RULE OF NEGOTIATING AND SUCCESS: HE WHO HAS THE GOLD MAKES THE RULES,” which reignited interest in both assets due to the historical association between wealth and power.
Following Trump’s announcement, gold surged to a record price of $3,385, reflecting a near 2% increase within 24 hours, while Bitcoin rose approximately 3% to $87,500, marking a 4.5% increase over the past week. Analysts attributed this spike to broader factors, such as ongoing US-China tensions and the rising uncertainty in the global economy, rather than solely Trump’s comments.
The Kobeissi Letter noted that the simultaneous growth of gold and Bitcoin suggests investor consensus on escalating uncertainty in the market and a potential decline of the US dollar. Observations highlighted that gold reached its 55th all-time high in 12 months, and Bitcoin’s rise beyond $87,000 indicates a convergence in perceptions of both assets, warning of a weaker dollar ahead.
Contributing to the dollar’s decline, the US dollar index fell to a three-year low amid concerns over Trump’s potential influence on monetary policy. Comments from National Economic Council Director Kevin Hassett intensified fears about the president’s ongoing criticism of Federal Reserve Chairman Jerome Powell, prompting traders to sell the dollar aggressively.
Furthermore, Bitcoin’s unusual resilience during this dollar decline is noteworthy. Traditionally, a weakening dollar leads to decreased Bitcoin prices due to the perception of both currencies as alternative safe-haven investments. However, this time, Bitcoin’s price increase signals a possible shift in its role as a store of value, implying a separation from tech sector fluctuations.
Despite the narrative portraying Bitcoin as ‘digital gold’, data shows a weak correlation of 0.3 with gold, suggesting that their price movements are generally independent. Conversely, Bitcoin has demonstrated a stronger correlation with tech equities of up to 0.7, confirming its closer alignment with the tech sector rather than established safe-haven assets.
