‘People are chucking stuff like gold and Bitcoin’ as rising inflation leads investors to seek yield
“Because these are non-yielding assets, and we expect inflation to rise… people are chucking stuff like gold and Bitcoin to find… government bonds that are going up, providing you [with] income,” Chris Beauchamp, chief market analyst at financial technology company IG Group, told Fortune.
Key points
- Bitcoin’s bad year Friday’s drop dealt a fresh blow to Bitcoin investors, who had only recently found their footing after months of losses.
- Analysts say the cryptocurrency is also caught up in the AI boom, which is competing for investors’ money while helping keep the economy strong enough for interest rates to stay high.
- Gold traded near $3,900 an ounce on Friday, well below its January peak of about $5,600, according to financial data provider Trading Economics.
Heavy borrowing and spending on AI have created what 21Shares calls an “AI black hole,” drawing money toward the sector and away from assets like Bitcoin and gold.
Additional details
- In Coltman’s view, AI spending is helping prop up an otherwise weak economy, giving the Fed room to keep fighting inflation with higher rates.
- That was largely because investors had seen the outcome coming, according to Stephen Coltman, head of macro at crypto asset manager 21Shares.
- The firm’s demand indicator recorded its weakest reading since December 2023, while Bitcoin exchange-traded funds became net sellers again.
- Inflation and politics aren’t the only forces shaping Bitcoin’s outlook.
- “The midterm results weren’t a surprise, and they don’t change the regulatory interpretations as they stand today… We at least have some regulatory stability for two years,” he said.
How this summary was made: extractive summary — built from the sources' own reporting. It is drawn only from the reporting of the sources listed below — read the originals for full detail. How we summarize →
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