In December 2023, the gold market achieved a significant milestone, with the spot price soaring to a new high of $2,100. This surge was influenced by various factors, including geopolitical uncertainties, particularly the ongoing Israel-Palestinian conflict, which heightened the demand for gold as a safe-haven asset.
Economic factors also played a role, with expectations of interest rate cuts and a weakening U.S. dollar bolstering gold prices. Analysts predict that gold prices could remain above the $2,000 level, potentially reaching up to $2,200 by the end of 2024. Central bank purchases, viewing gold as a more reliable reserve asset, are expected to further drive demand.
This surge in gold prices highlights its role as a stable investment during times of economic and geopolitical turmoil. The anticipation of interest rate cuts by the Federal Reserve and other central banks can make gold more attractive, as it typically inversely correlates with interest rates. A weaker U.S. dollar makes gold cheaper for holders of other currencies, potentially increasing demand.
Bitcoin BTC -1.86%, on the other hand, has been on a steady upward trajectory, reaching a new high for 2023 and currently holding at $43,971. This represents a significant 16% increase over the past week.
Factors contributing to this rise include the upcoming Bitcoin halving and the growing excitement about the possible approval of a Bitcoin spot exchange-traded fund (ETF) in the United States by January 2024. BlackRock Inc., a leading asset manager, is poised to make significant strides in the competitive landscape if the United States Securities and Exchange Commission (SEC) approves its spot Bitcoin ETF. Bitcoin’s current price sits at $43,971, with a trading volume of $60.36 billion and a market cap of $859.33 billion. Over the past 24 hours, the price has seen a small increase of 0.45%.
On several timeframes, Bitcoin’s price is showing a strong upward trend and forming a bullish pattern. If Bitcoin secures approval for ETFs and mirrors a rally similar to the least dramatic post-halving surge of 122% after reaching $50K, there’s potential for it to hit or even surpass $110,000 by the close of 2024.
Peter Schiff, a prominent gold supporter, has remained critical of Bitcoin’s surge. Schiff predicted an impending crash for Bitcoin, despite its climb above $40,000, and celebrated gold reaching a new record high price.
Over the past ten years, during which Schiff has publicly expressed his disdain for Bitcoin, gold has doubled in price, while Bitcoin has increased around 50 times. Schiff warns that the price of Bitcoin is on course for a “spectacular” crash, arguing that market excitement surrounding spot Bitcoin ETFs amounts to a “speculative frenzy.” He believes that the anticipated Bitcoin ETF approval will trigger a mass sell-off from speculative investors.
Despite his skepticism, Galaxy predicts that Bitcoin ETFs could raise $38.6 billion from institutional investors within three years, with demand expected to grow to $100 billion or more.