Gold Outperforms Bitcoin Despite Rate Cut Bets — Why?

NAIROBI (CoinChapter.com) – Gold prices increased by over 3% this week, nearing their all-time high, as investors seek safe-haven assets amid geopolitical unrest in the Middle East and ongoing economic uncertainty.

In contrast, Bitcoin has struggled to maintain upward momentum. Concerns are growing that the Federal Reserve may not cut interest rates quickly enough, prompting a move away from riskier assets like stocks.

Over the past week, Japanese stocks entered a correction, causing a broader selloff across Asia. Despite Fed Chair Jerome Powell stating no immediate plans for a rate cut, traders now expect the Federal Reserve to ease rates in September.

Futures markets show a 17% chance of a 50-basis point cut, up from 5% before Powell’s comments, reflecting increased market expectations for monetary easing.

Could Gold’s Rally Leave Bitcoin in the Dust?

Gold’s safe-haven appeal has strengthened as U.S. Treasury yields decline and the dollar weakens. The 10-year U.S. Treasury yield recently posted a six-month low near 3.95%, reducing the opportunity cost of holding non-yielding assets like gold.

Concurrently, the U.S. Dollar Index, which tracks the dollar against six major currencies, edged lower to near 104.25.

Geopolitical tensions, especially conflicts involving Israel, have increased demand for gold as investors seek safe-haven assets during political uncertainty.

Additionally, market speculation about the Federal Reserve’s policy pivot was fueled by Powell’s dovish guidance, even as the central bank kept interest rates steady at 5.25%- 5.50%.

Weak economic data, including a contracting ISM Manufacturing PMI and the highest initial jobless claims in 11 months, further bolstered the case for a rate cut.

The U.S. Nonfarm Payrolls (NFP) report, released today, showed an increase in the unemployment rate to 4.3% in July, with nonfarm payroll employment rising by 114,000. This weaker-than-expected job growth adds pressure on the Federal Reserve to consider rate cuts, reinforcing gold’s appeal as a safe haven.

Bitcoin Teeters: Will It Hold $64K or Dive to $59K?

As of Aug. 2, Bitcoin is trading at $64,413.73 with a market cap of $1.27 trillion. The cryptocurrency’s price is trying to establish support in the $63K to $64K range, crucial for determining whether the price will move upward or drop to $59K, according to Crypto Raven.

Bitcoin exchange-traded funds (ETFs) have seen inflows, with $50.6 million recorded on August 1, led by Grayscale’s newly launched Bitcoin Mini Trust.

In contrast, Bitcoin faces headwinds as it struggles to break key resistance levels. Despite positive net flows into exchanges, indicating investor accumulation, Bitcoin’s price has remained range-bound.

Santiment data suggests that the crowd isn’t showing major fear regarding Bitcoin, although the sentiment could change if Bitcoin approaches $60K. The social volume for terms like FOMC, Fed, and Powell has spiked, indicating heightened awareness and discussion in the crypto community about monetary policy’s impact.

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