Thomas Perfumo, Kraken’s Global Economist, on Bitcoin’s new all-time high:
Bitcoin has surpassed its all-time highs in recent days, reflecting a broad risk-on sentiment across global markets. Its behaviour appears to be moving in tandem with other asset classes, following the performance of gold —which has outperformed Bitcoin so far this year— and the S&P 500, which is also trading at all-time highs.
Markets are increasingly pricing in rate cuts by the Federal Reserve, with expectations now pointing to at least two consecutive reductions, even though inflation remains sticky.
With the US dollar having fallen roughly 10% so far this year, much of the recent debate has centred on the so-called “debasement trade”, that is, the idea that investors are rotating into financial assets as a hedge against the dollar’s loss of value. While this backdrop undoubtedly favours Bitcoin, it is worth noting that this dynamic has been in place all year. The latest rally may therefore be less about a new catalyst and more a case of price driving the narrative.
