Gold price continued its strong bull run this year and is now sitting at its all-time high. It jumped to a record high of $5,597, up by 100% in the last 12 months and 26% this year. This article explores some of the top reasons by gold is beating Bitcoin this year.
Gold Price is Beating Bitcoin Because of its Safe-Haven Status
The main reason why gold price is thriving today is because of its role as a safe-haven asset. That happened because global risks continued rising during the Trump administration.
The main risk today is that Donald Trump is preparing an attack on Iran now that a large armada has arrived in the region. He is under pressure from top neocons like Mark Levin, Tom Cotton, and Lindsey Graham. A new war in the Middle East will lead to more volatility and higher crude oil prices.
Another main risk has been on Federal Reserve independence. Trump has constantly warned Jerome Powell, the Fed Chair he appointed in his first term. The Justice Department has issued subpoenas to the Chair, while the Supreme Court is working on the Lisa Cook firing case.
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Additionally, there are rising risks that the US public debt is getting out of hand. It is rising by $2 trillion a year, even as some countries consider dumping their US debt holdings. China has reduced its debt holdings from over $1.2 trillion to $650 billion today.
Therefore, gold price is doing better because it is seen as a safer haven asset than Bitcoin. Bitcoin’s role as a haven has eased as it always drops whenever risk emerges.
Gold has also done better as central bank accumulation continues now that the US has weaponized the dollar. Some of the top central banks buying gold are Russia, India, and China.
Crypto Market Reeling From October 10 Liquidation
Meanwhile, the crypto market is struggling because investors are still coming to terms with the massive liquidation event that happened on October 10.
Data shows that cryptocurrencies worth over $20 billion was liquidated on that day. This liquidation happened after Donald Trump threatened China with massive tariffs. Analysts, including OKX’s CEO, also believe that exchanges like Binance contributed to that liquidation.
The liquidation event led to a sharp decline in the futures open interest, which moved from $255 billion in October to $134 billion. This is notable as low futures open interest is a sign that investors are not using more leverage in trading.
The large liquidation event also explains why the Crypto Fear and Greed Index has remained in the red for months. In most cases, traders avoid the crypto market whenever there is fear in the market.
On the positive side, Tom Lee believes that the crypto market will do well once the rotation to hard assets ends soon.
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