AXMIN Inc (TSXV: AXM)
AXMIN Inc. (TSXV:AXM) is a Canadian-based exploration and development company with a strong focus on central and West Africa.
This week, an intriguing phenomenon has emerged in the market: both Bitcoin and gold prices have reached historic highs simultaneously, marking the first occurrence of a “double peak” phenomenon since Bitcoin’s inception over a decade ago. Investors are perplexed because the driving forces behind these two assets are entirely different. Gold has been a safe-haven asset for thousands of years, while Bitcoin’s primary characteristic is its speculative nature.
On Tuesday of this week, the price of Bitcoin in the United States surged to a record-breaking $69,191.95, surpassing the previous all-time high set during the November 2021 period of the pandemic, but subsequently retreated to around $63,300. On the same day, the price of gold rose to a new high of $2,141.79 per ounce, surpassing the previous high set in December. Over the past 5 trading days, the price of gold has risen by nearly 5%.
The record highs of gold and Bitcoin prices signal conflicting market sentiments.
Bitcoin’s price has surged by nearly 50% this year, driven significantly by the listing of the U.S. Bitcoin spot trading exchange-traded fund (ETF) and a substantial influx of funds, crucial factors powering the sharp rise in the price of this cryptocurrency known as the “digital gold”. Despite its safe-haven function, Bitcoin has exhibited characteristics of a risk asset for most of the time, especially with the recent continuous surge in the U.S. stock market.
Kyle Rodda, senior market analyst at Capital.Com Inc., stated that the fervor in the cryptocurrency market is closely related to risk appetite in the stock market and the entire market. The resurgence of meme coins reflects irrational speculative behavior, similar to certain popular stocks in the stock market.
In contrast, the increase in gold prices highlights demand for safe-haven assets and defense. On one hand, there is concern about the potential risks posed by geopolitical tensions, and on the other hand, the possibility of global stock market corrections after frequent all-time highs continues to rise. Currently, factors such as hedging against inflation and geopolitical risks, betting on Fed rate cuts, and increasing positions by global central banks have all led to a significant increase in bullish sentiment for gold.
Chris Weston, research director at Pepperstone Group, suggested that to understand this phenomenon, it might be insightful to consider it from the perspective of traders’ behavior. In his view, short-term capital is currently chasing short-term hotspots in various asset classes, such as gold, particularly with rapidly increasing overnight trading volume, and of course, Bitcoin.
Despite each having its own reasons for the price surge, both Bitcoin and gold are closely associated with market demand for safe-haven assets and are considered beneficiaries of expectations for relaxed monetary policies. The swap market indicates a 62% probability of a Fed rate cut in June, compared to 58% at the end of February.
It’s important to note that the market is dynamic and can be influenced by numerous factors. This nuanced and complex relationship between Bitcoin, gold, and the broader market shows the interconnectedness of various assets and market sentiments.
