According to market analysts, Bitcoin and gold have both rallied in recent days on the back of increased global liquidity, central bank balance sheet expansion and the Fed’s recent rate cuts. Bitcoin has risen 7% in the last five days, surpassing $64,000 for the first time since August, while gold has also hit a new record this year, reaching $2,600 per ounce.
Charlie Bilello, Chief Market Strategist at Creative Planning, noted that for the first time since Bitcoin’s inception in 2009, both Bitcoin and gold were among the best-performing assets of the year.
Analyst James Van Straten attributes this outperformance to several factors, including the expansion of global central bank balance sheets and the Fed’s decision to cut interest rates by 50 basis points to stimulate investment and economic activity. The Fed’s current balance sheet is $7.1 trillion, and while quantitative tightening has continued, its pace has slowed. The reduction in reverse repo balances, now just over $300 billion, has added liquidity to the financial system, spurring lending, investment and overall economic growth.
Globally, the combined balance sheets of the world’s 15 largest central banks, including the United States, the European Union, Japan, and China, have risen to nearly $31 trillion. This trend, which has been climbing since July, illustrates the recovery in global liquidity that has particularly benefited Bitcoin, a cryptocurrency closely tied to liquidity trends.
The Fed’s rate cut has further strengthened both Bitcoin and gold, as lower rates tend to encourage investment in riskier, alternative assets. According to analysts, increased liquidity and stimulus measures are helping both assets reach new highs, solidifying their roles as top performers in the current economic environment.
*This is not investment advice.