Bitcoin experienced a notable rally on Friday, climbing approximately 1.6% to trade at over $122,000, bringing it close to its all-time high of around $124,000, reached in August. This surge comes amidst ongoing economic uncertainty stemming from a government shutdown in the U.S., leading some investors to perceive Bitcoin as a potential safe-haven asset akin to gold.
As Bitcoin neared its peak, spot gold also saw a slight increase, jumping 0.5% to $3,876.55 per ounce. Gold prices have surged more than 2% this week, and year-to-date gains for gold futures have soared over 46%. Analysts are observing an increasing correlation between Bitcoin and gold, particularly as Bitcoin is often referred to as “digital gold” due to its finite supply. Alex Saunders, Citi’s head of quant macro research, highlighted this relationship during a segment on CNBC’s “Closing Bell Overtime.”
The context for this rising interest in Bitcoin aligns with broader concerns over economic stability. Treasury Secretary Scott Bessent expressed concerns about the potential detrimental effects of the government shutdown on economic growth. Standard Chartered echoed this sentiment, labeling the current shutdown as significant, especially when compared to prior shutdowns.
Geoff Kendrick from Standard Chartered pointed out that during the previous shutdown in 2018 under the Trump administration, Bitcoin’s market position was markedly different, leading to minimal impact from government uncertainties. This time, however, Bitcoin appears to be trading in direct relation to risks posed by the U.S. government, particularly as indicated by its connection to Treasury term premiums.
Looking ahead, Standard Chartered suggests that Bitcoin may soon set a new record, projecting it could reach $135,000 in the near future. In broader market movements, the Dow Jones Industrial Average rose by 310 points, or 0.7%, while the S&P 500 experienced a modest uptick of 0.1% on the same day.
