The Bitcoin (CRYPTO: BTC) price and the gold price have at least one thing in common.
Both have been racing to new record highs.
Earlier today, the gold price once more broke into new all-time high territory. Spot gold was trading for US$3,998.75 per ounce, just a whisker away from the psychologically important US$4,000 mark. This sees the gold price up 53.3% since this time last year.
The Bitcoin price has enjoyed even stronger gains.
The world's biggest crypto notched its own record high yesterday, with the token trading for US$126,198.07, according to data from CoinMarketCap.
Bitcoin has retraced 3.6% since that fresh highwater mark, currently trading for US$121,410.06. Still, that sees the token up 94.4% since this time last year. And it gives Bitcoin a market valuation of US$2.4 trillion.
Commenting on the surging gold and Bitcoin prices, Josh Gilbert, market analyst at eToro, said, "Ultimately, investors are re-evaluating what money and value mean in a world of persistent fiscal strain and policy uncertainty."
Gilbert continued:
Central banks keep running expansive monetary policies, and global money supply keeps rising. The record highs in both gold and Bitcoin are a clear message that confidence in traditional currencies is fading, and investors are increasingly turning to alternative stores of value.
Image source: Getty Images
What's driving the Bitcoin price to new records?
The rise of crypto exchange-traded funds (ETFs) and institutional adoption are among the factors helping send the Bitcoin price to new highs.
"For Bitcoin, the break to new records comes after continued institutional accumulation, with over US$3.2 billion flowing through bitcoin ETFs in the last week," Gilbert said.
"What's changing is how investors view the asset. It's evolving from a volatile, speculative trade within diversified portfolios," he added.
Gilbert concluded:
Its performance in the last three years, alongside continued record highs this year, cements Bitcoin's position as a core component of the modern investment landscape. To be clear, this is still a risk asset, and the asset remains in its infancy, but each day, it continues to mature into an asset investors want to allocate towards.
How about the soaring gold price?
The Bitcoin price may have outpaced the gains set by the gold price, but that's not the case for many ASX gold stocks, which are leveraged to the price of the yellow metal.
While the gold price is up 53.3% in 12 months, the S&P/ASX All Ordinaries Gold Index (ASX: XGD) has rocketed 92.0%, with a number of prominent ASX gold stocks gaining far more.
Shares in ASX 200 gold stock Regis Resources Ltd (ASX: RRL), as just one example, are up 210.8% since this time last year.
Atop getting support from falling interest rates in most major economies, the gold price has charged higher amid the ongoing uncertainties driven by the shutdown of the United States government. And in recent days, France has thrown its hat into the ring, driving geopolitical uncertainty following the resignation of Prime Minister Sebastien Lecornu.
These events have also likely helped drive gains in the Bitcoin price.
Commenting on the fast-rising gold price, Ken Griffin, founder of hedge fund Citadel, said (quoted by The Australian Financial Review):
We're seeing substantial asset inflation away from the dollar as people are looking for ways to effectively de-dollarise or de-risk their portfolios, vis-à-vis US sovereign risk.
You see sovereigns around the world, the central banks around the world, as you see individual investors around the world go, you know what, I now view gold as a safe harbour asset in a way that the dollar used to be viewed. That's what's really concerning to me.
