Digital assets surge as market participants hedge against political and economic uncertainty
Bitcoin shattered its previous records this weekend, surging to an all-time high of US$125,689 as investors sought safety amid the ongoing US government shutdown, according to Bloomberg.
The world’s largest cryptocurrency has climbed more than 30 percent this year, with a 12 percent gain just this week, as market participants increasingly view digital assets as a hedge against mounting political and economic uncertainty.
The so-called “debasement trade” has taken hold, with investors moving capital into Bitcoin, gold, and even equities as the US dollar and treasuries slide, reported Bloomberg.
Spot gold prices rose 0.5 percent to US$3,876.55 per ounce on Friday, marking more than a 2 percent gain for the week, while the S&P 500 and Nasdaq Composite also posted modest increases.
Geoff Kendrick, global head of digital assets research at Standard Chartered, noted that “the shutdown matters this time around,” highlighting Bitcoin’s increased sensitivity to US government risk.
Kendrick expects Bitcoin to reach new highs soon and ultimately approach US$135,000, as reported by CNBC.
Adding to the bullish sentiment, Bitcoin has historically outperformed in October—earning the nickname “Uptober”—with gains in nine of the past ten years, according to Bloomberg.
Renewed inflows into Bitcoin-linked exchange-traded funds and a favourable legislative climate have also contributed to the rally, as public companies and institutional investors increase their allocations to digital assets.
Joshua Lim, co-head of markets at FalconX, observed that “with many assets including equities, gold and even collectibles like Pokemon cards hitting all-time highs, it’s no surprise Bitcoin is benefitting from the dollar debasement narrative,” as reported by Bloomberg.
