Key results:
The price of gold increased by 3% between May 29 and June 2, reaching the highest level for over three weeks, while Bitcoin (BTC) has over USD 105,000.
The weaker dollar forces investors elsewhere
Although this brief -term worse results may seem negative at first glance, several macroeconomic indicators suggest that Bitcoin may explode earlier than expected.
The American dollar index (DXY) fell to the lowest level in six weeks, signaling that investors reduce the exposure to the currency in the USA. This trend usually reflects the decreasing trust in the monetary policy of the federal reserve and/or growing concerns about the sustainable development of the US government’s debt.
The Secretary of the US Treasury Scott Bessent told CBS on May 1 that the country “will never be default”, adding that “we are on the warning track.”
These comments occurred after the JPMorgan Chase Jamie Dimon CEO raised the alarms after the Act on the House of Representatives, proposing an additional boost in $ 4 trillion to the ceiling of debt.
The weaker DXY index encourages owners of USD 31.2 trillion of the outstanding US Federal Debt to search for phrases elsewhere. While constant income investments offer predictable returns, the value of the American dollar remains unstable. If foreign currency -based investments provide better yields, the capital will probably leave the dollar.
The USAs have incentives to diversify gold reserves
Despite Gold cancellation, there are several factors that may limit the demand of investors. The US government is the largest owner of precious metal, which means that the State Treasury can sell part of its reserves to strengthen its fiscal position. The redemption of part of the debt, especially long -term bonds, would probably boost the American dollar.
Even if the United States was selling 17% of gold reserves, which corresponds to $ 171.8 billion at current prices, he would still run global rankings with a wide margin of over 100%. However, although significant, this amount would cover only about three weeks of the federal deficit, which makes the effort relatively ineffective.
Related: Blockchain Group adds USD 68 million to Bitcoin to the Corporate Treasury
On the other hand, an investment in the amount of $ 171.8 billion in Bitcoin would definitely establish dominance in the US in assets, easily exceeding the estimated shares in China 190,000 BTC. More importantly, this scenario is likely after signing the strategic executive order of Bitcoin reserves by President Donald Trump in March 2025.
Although the US has the world’s largest gold reserves, it is not one of the four best producers. Data from the World Golden Council are occupied by China, Russia, Australia and Canada as leading gold -producing nations. As a result, the United States has a slight motivation to promote rising gold prices, especially during ongoing commercial disputes and increased geopolitical tensions.
ETF flows show less confidence in the top of gold
In addition, the data show net outflows from funds from the Gold Stock Exchange (ETF) despite the last price boost, while ETF Bitcoin Bitcoin has recorded $ 3 billion net inflow from May 15. This does not necessarily mean that gold investors change to cryptocurrencies, but reflect the lack of trust in brief -term Gold.
Gold has developed into a class of assets worth USD 22.7 trillion, which makes it less attractive compared to alternative shares and investments. However, Bitcoin market capitalization worth $ 2.1 trillion suggests a significant place for development.
Instead of positioning as a direct competitor, Bitcoin is gaining popularity, because concerns about the stability of the US government – something that also drives Gold’s growth.
This article is used for general information purposes and should not be and should not be treated as legal or investment advice. The views, thoughts and opinions expressed here are themselves and do not necessarily reflect or represent the views and opinions of Cointelegraph.
