Market analysts from The Kobeissi Letter have observed a notable rise in precious metals and Bitcoin (BTC), reaching new all-time highs. This surge occurs alongside a significant decline of the US dollar (USD), which is poised to register its worst year since 1973. Analysts project that these shifts indicate a “generational” macroeconomic transformation.
Recent data reveals that the S&P 500 stock market index has increased over 40% in the past six months. BTC recently peaked at over $125,000, while gold is trading at unprecedented levels, hitting $3,880 per ounce, and is closing in on the $4,000 mark. The Kobeissi Letter noted, “The correlation coefficient between gold and the S&P 500 reached a record 0.91 in 2024.” This unusual relationship between typically safe-haven assets and risk assets suggests that markets are adapting to a “new monetary policy.”
The analysts highlighted a widespread movement into various assets. As inflation rises and the labor market shows signs of deterioration, the Federal Reserve is implementing interest rate cuts. The USD has declined over 10% year-to-date, having lost a staggering 40% of its purchasing power since the year 2000.
This analysis comes at a time when the US is facing a government shutdown, coupled with significant downward revisions in job figures that signal a weakening labor market. These developments, alongside messages of growing concern regarding the diminishing value of the dollar, are acting as positive catalysts for BTC.
Fabian Dori, chief investment officer at Sygnum, a global digital asset bank, echoed this sentiment, attributing BTC’s recent rise to macroeconomic drivers, specifically referencing the ongoing US government shutdown. The shutdown has led to the complete closure or minimal operation of various regulatory agencies, fostering what Dori terms “political dysfunction.” This scenario has, in turn, renewed investor confidence in Bitcoin as a viable store-of-value monetary technology, particularly as confidence in traditional institutions wanes.
As the market continues to react to these shifting dynamics, both investors and analysts remain closely attuned to the implications of these developments on various asset classes, particularly in light of Bitcoin’s bullish momentum and the evolving outlook on fiscal policy.
